Vienna, May 22 (Reuters): The Federal Reserve may need to continue raising interest rates depending upon how economic conditions evolve in the United States, International Monetary Fund chief Rodrigo Rato said on Monday.

Generally he said the withdrawal of stimulative monetary conditions globally is a “healthy movement”, especially given that inflationary risks are to the upside. But central banks need to time moves based upon conditions in their own regions.

“I back the idea that the US monetary authorities have done a very important job in getting to a more neutral monetary policy regarding their own economy.

“Still some measures might be needed in the future, but that will depend very much on the data on the strength of the US economy,” Rato, the IMF managing director, said at a news conference.

Rato urged caution on the parts of the Bank of Japan and the European Central Bank, where recoveries are less well entrenched.

“In the case of Europe, there is a need for higher growth.... We see the need for monetary policy to be very aware in Europe (that it is still in) the first stages of the recovery,” he said.

Markets have speculated that the ECB may raise rates by as much as half a percentage point at its June 8 meeting. But the IMF regularly has urged the ECB to go slowly with rate tightening, given that domestic spending remains very weak.

As for Japan, Rato called the ending of its policy of flooding the markets with cash to beat deflation “positive” but said the BoJ should be “very cautious in terms of future movements”.

The end of monetary stimulation by all three of the world’s major central banks ? the Fed, the ECB and the BoJ ? and fears that mounting inflationary pressures worldwide may require more aggressive rate tightening has unsettled global financial markets in recent weeks.

Key stocks indices in the US, Europe and Japan have fallen from their late April to early May peaks, shedding at least 5 per cent in value.