Rising interests rates pose biggest threat to the global economy - Rogoff

Ken Rogoff, former chief economist of the International Monetary Fund (IMF) has warned that rising interest rates "threaten the global economy."

Talking to the BBC, Rogoff went on to explain that levels of personal and corporate debt had risen in the global economy.

While he had previously said China posed the number one threat to the global economy, he now warned that as people had grown accustomed to ultra-low interest rates - which were put in place to encourage investors to borrow after the financial crisis - that levels of personal and corporate debt had risen.

Rates have been kept at all-time lows in most developed economies since the financial crisis, with the UK interest rate standing at 0.25% for 12 months now.

"If something was to happen that pushes interest rates up, we could see a lot of soft spots - places where there is high debt - start to unravel," Mr Rogoff said.

While not naming any particular policy, Rogoff also noted that Trump administration was creating further uncertainty as the White House pursued a more protectionist trade agenda and sought to relax regulations that protected the financial system from further crashes.

"The risk is that the White House or the US will do something really irrational. That may seem hyperbolic but we are all holding our breath," Mr Rogoff said.

Ten years on from the beginning of the financial crisis, the economist turned Harvard professor stated that China, the world's second largest economy still remains a threat due to its own debt problems and political instabilities.

He also noted that the current political climate in the US owes a lot to the events of 2007, Rogoff said a whole generation had been "scarred" as a result of the crash, as many young people struggled to gain employment because of it.

"The US would not have had Donald Trump as president without the crash," said Rogoff, "I think the crash greatly amplified this wave of populism that the world's feeling right now."