Possible rate hike looming?

"Will the Central Bank raise interest rates at the end of the year, or will we have to wait longer?" This is one of the biggest questions amongst economists here in the UK and in the US.

The US NFP report released this month was much better than expected, with 271K new jobs created the previous month it beat analysts expectation of 181K new jobs. However it wasn't all good news, as there was a slight rise in unemployment claims and a drop in retail sales in the US.

Both the Federal Reserve and the Bank of England will be cautious about raising rates, however over in the US the Federal Reserve seems to be more hawkish regarding a rate rise at the end of the year.

Recently Vince Cable the former Business Secretary in the UK has publicly warned that soaring house prices in the UK along with Britain's love affair with home ownership, has kept household debt in the UK elevated. Couple this all with the slow down in China's economy, and the recovery of the UK economy looks fragile according to Mr Cable.

If the Bank of England is to take any notice of Mr Cable who made similar warnings before the 2007 financial crash, they may not be in a rush to raise rates anytime soon, and when they finally do raise rates it will not be drastic and it probably won't be to the double figure levels of the past.

Follow @ PiDeJonge