Fed won’t move until labour market uncertainty clears

The sudden stop in employment growth rules out any chance of a rate hike from the Fed at next week’s FOMC meeting, particularly now that the UK vote on whether to leave the European Union (EU) appears to be going down to the wire. A quick rebound in payroll employment growth in June (data due in early July) and a decisive UK vote to remain in the EU (23rd June) could yet persuade the Fed to raise interest rates in late July. At this stage, however, a delay until the September FOMC meeting is perhaps more likely.