Analysts at UBS believe the US Federal Reserve should be ready to cut rates by September.

The investment bank, in its blog assessing the Beige Book, noted that Monday's retail sales data for March surprised to the upside, rising 0.7% month over month after an upward-revised 0.9% increase in February.

However, while analysts would not dismiss the strength of the recent official data out of hand, the Beige Book makes the bank think that consumer spending and GDP may not be growing as fast as the GDPNow estimate suggests.

"We would also note weakness in the recent NFIB survey of small businesses, which fell to a 12-year low," said UBS.

Analysts stated: "In our view, the Fed cannot cut rates until the inflation data cools off, but the softness expressed by their contacts will make them more reluctant to even contemplate additional rate hikes."

So, for the time being, and in line with Fed Chair Jay Powell's recent comments, UBS believes the most likely course of action is for the Fed to keep rates where they are for the time being.

However, if inflation slows in line with their base case forecast, analysts believe the "Fed should be ready to cut rates by September."