With the US Federal Open Market Committee (FOMC) scheduling its next meeting in mid-June, economists worldwide are pondering the timing of the next rate hike.
When it comes to the Fed and the next rate hike, the question obviously isn’t will they or won’t they - but it’s more about when.
Economists seem to be split about the timing of the Federal Reserve’s next interest-rate increase, mirroring uncertainties in the current economic and financial environment.
This is compounded by a potentially disruptive vote in the UK next month, or Brexit as it is well known, over its place in the European Union.
About 31% of economists surveyed by The Wall Street Journal recently said the Fed will raise short-term interest rates at its June 14-15 meeting, while another 31% expected it to wait until September. A further 21% thought the Fed will move next at its July meeting.
The sudden drop-off in expectations of a June move followed a bumpy few weeks for the US economy. In April, the Department of Commerce reported that output rose in the first quarter at a seasonally adjusted annual rate of 0.5%, the weakest in two years. Employers also reportedly pulled back in April, adding 160,000 jobs, down from 208,000 in March and 233,000 in February.
A recent Reuters poll found the  Federal Reserve will likely wait until September before raising interest rates again, stretching to nine months the time since its first hike in nearly a decade.
But the Fed officials have not given any hint on rates as yet. Their most recent policy statement, released following their April meeting, said the central bank “continues to closely monitor inflation indicators and global economic and financial developments”.
This clearly indicates the Fed chairwoman Janet Yellen and her colleagues are not in a hurry to raise rates again.
According to Qatar’s QNB, although the US economic recovery is anything but impressive, further rate hikes are still warranted.
The US economy grew by only 0.5% on an annualised basis in the first quarter of 2016, according to official estimates released a few weeks ago. This, QNB said represents a continuation of the slowdown witnessed in the last quarter of 2015, when the economy grew by 1.4% compared to an average of 3% in the previous two quarters.
But QNB expects growth to pick up, with the economy expanding by 2.1% over the whole of 2016.
The projected pick-up, expected to be driven by higher private consumption, is far from impressive, but it is sufficiently robust to bring the unemployment rate further down and sustain the strong recovery in the labour market.
This might convince the Fed to raise interest rates again, especially given the firming of inflation, which is edging closer to the 2% target, it noted.
The timing may not be clear as yet, but the general consensus is that a tighter labour market and higher inflation might convince the Fed to continue its rate increases in the second half of this year.