The Federal Reserve signalled it was likely to hold any imminent interest rate rise on Tuesday as chair Janet Yellen warned of the impact of Britain’s possible exit from the European Union, slower job growth and global worries about China on US economic growth.

Yellen has been warning of the impact of jittery investors and volatile markets over the last few months. Her comments come after two months of lackluster reports on the US jobs market and growing signs of nervousness about the UK referendum on European Union membership on US stock markets.

“One development that could shift investors’ sentiment is the upcoming referendum in the United Kingdom,” she said in her testimony before the US Senate committee on banking, housing and urban affairs. “A UK vote to exit the European Union could have significant economic repercussions.”

When pressed for more details, Yellen said Britain leaving the EU, also known as Brexit, would usher in a period of uncertainty and lead to volatility in financial markets, both of which would affect US economic outlook. Given the considerable challenges faced by China and the situation in the UK, Yellen said the Fed will continue monitoring global economic and financial developments.

Pushed further, Yellen added that she said Britain leaving the EU “could” affect the US economic outlook but that she does not “know that it would”. Financial reaction could result in a “flight to safety” that might push up the dollar and other safe haven currencies. “I don’t want to overblow the possible impacts but we’ll watch it carefully,” she said.

Asked if the US economy could go back into recession if Britain leaves the EU, Yellen said: “I don’t think that is the most likely case, but we just don’t know what will happen.”

“We simply cannot predict what will happen on Friday – no one can,” Carl Weinberg, founder and chief economist of High Frequency Economic, said before the hearing. “The number of undecided voters is three times the gap between the ‘leave’ and the ‘stay’ camp, even with ‘stay’ pulling ahead over the weekend. The polls are probably useless anyway if their recent forecasting records are indicative.”

Weinberg added that “fear of Brexit is likely worse than Brexit itself … but like dying, we will not know until we get there”.

In her remarks, Yellen noted that members of the Federal Open Markets Committee (FOMC), the Fed’s interest policy-setting committee, expect there to be just two more rate hikes this year.

“Most FOMC participants, based on their projections prepared for the June meeting, anticipate that values for the federal funds rate of less than 1% at the end of this year and less than 2% at the end of next year will be consistent with their assessment of appropriate monetary policy,” she said.

She stressed that monetary policy “remains accommodative” and that “if the economy were to disappoint, a lower path of federal funds rate would be appropriate”. And while the Fed does have legal basis to implement negative rates, it is not something it is considering, she said.

In June, the US central bank left interest rates unchanged at 0.25% to 0.5% for a fourth time this year. After the Fed raised rates from near zero for the first time in almost a decade in December, it was expected to hike rates four times this year. Since then, the forecast has been adjusted to just two hikes in 2016.

“We expect the Fed will be tightening again before long, although given the very cautious tone, tightening as soon as July looks quite unlikely, even if the June employment report is quite strong,” said Jim O’Sullivan, chief US economist at High Frequency Economics. “There will be three more employment reports in total before the September meeting.”