IMF and G30 offer differing views on interest rates

Interest rates must be kept low if the world economy is to avoid a crash, the International Monetary Fund (IMF) warned over the weekend.

The global economy is currently growing at a rate of 3.1%, down from 3.4% in 2014.

Managing director of the IMF, Christine Lagarde, said that the main risks in many advanced economies continued to be a decline of already low growth, "particularly if global demand falters further and supply constraints are not removed".

What is needed, she said, are "continued accommodative monetary policies and improved financial stability".

However, a report released by the G30 following the comments warned against keeping interest rates low for an extended period of time, saying this would result in a crisis with dangerously high levels of debt.

"The supportive actions by central banks can be useful, but there are serious risks involved if governments, parliaments, public authorities, and the private sector assume central bank policies can substitute for the structural and other policies they should take themselves," the report read.

"The principal risk is that excessive reliance on ever more central bank action could aggravate the underlying systemic problems and delay or prevent the necessary structural adjustments."

UK interest rates have remained at a record low of 0.5% since March 2009.