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Yellen Hints US Fed Rates Hike May Be Delayed

The chairwoman of the US Federal Reserve has indicated a hike in interest rates may be further delayed amid concerns over the health of the economy.

Although Janet Yellen was mostly optimistic, she failed to offer a specific timetable on when the cost of borrowing would increase - a marked change from a speech on 27 May, when she said a rate rise could be expected "in the coming months".

Many analysts had believed the federal funds rate was set to be increased next week, but this now seems unlikely following on from a "disappointing" jobs report and persistently below target inflation.

The federal funds rate was last increased by a quarter of a percentage point in December 2015 to 0.5% - and before that, the interest rate was frozen at 0.25% for eight years.

In comparison, the Bank of England interest rate has been held at more than 0.5% for seven years, and is unlikely to rise any time soon because of continued economic uncertainty caused by the EU referendum.

Ms Yellen discussed the prospect of Brexit during her speech in Philadelphia, warning: "A UK vote to exit the European Union could have significant economic repercussions."

Recent opinion polls which suggest the UK may be leaning towards an Out vote sent sterling to a three-week low against the dollar on Monday.

Many US economists now believe the federal funds rate may not be increased until July or even September.

Despite this, the Fed chair appeared upbeat with her forecasts for the US economy, and warned against attaching "too much significance" to a report which suggests only 38,000 jobs had been created last month - 122,000 fewer roles than had been forecast.

According to Ms Yellen, the US economy continues to face four main risks: slowing demand, lower productivity levels, overseas risks, and inflation.