Assist-king Fraser has emerged as a surprise target for Gunners boss Unai Emery after enjoying a stellar campaign.
The 25-year-old Scotland winger is out of contract at the end of next season, and Howe said: “We have spoken to Ryan and his representatives about his contract. It is one where we will see what happens.
“There is no doubting Ryan's quality and how highly we think of him. He is an outstanding talent but it is a two-way prospect to sign a contract, so let's wait and see.
“Ryan has contributed to the team this season but it's not the time to talk about speculation. Who knows in the summer? It is that time of year when things change and us ourselves will be looking to sign players."