Interest rates in the UK have been held at 0.5 percent after being revised in March 2009, in response to the global financial crisis, but the UK Chancellor, George Osborne, has hinted at the possibility of a rise in rates during an interview with BBC Radio 4’s Today programme.

“Just before Christmas, the United States saw a rise in interest rates”, he said. “Of course, there will come a point where that happens in Britain, a decision made by our independent central bank.”

However, he was quick to mention that before any rise in rates can happen, the UK economy must be stable enough to support such an increase.

The IMF warned central banks in their biannual Global Financial Stability Report how a rise in global interest rates could spark a massive credit crisis in emerging markets

“We’ve got to make sure in our country, and this is a responsibility of the government, not the Bank of England solely, that we are ready for whatever the interest rate environment is. We’ve got to be ready. Ultimately, if and when interest rates go up, that will be a sign of a stronger economy that is normalising after the extraordinary crisis of seven or eight years ago.”

The IMF warned central banks in their biannual Global Financial Stability Report how a rise in global interest rates could spark a massive credit crisis in emerging markets, as private businesses in these countries have taken advantage of the wave of cheap money that has existed for the past seven or so years.

“Shocks to the corporate sector could quickly spill over to the financial sector and generate a vicious cycle as banks curtail lending”, warned the IMF report.

Across the Atlantic in the US there are signs that the economy is beginning to strengthen, with the Federal Reserve raising rates by 0.25 percentage points – the first increase the country has seen since 2006.

The decision by US officials will raise the cost of borrowing in emerging market economies at a time when economic growth is hard to come by. The rate rise by the Fed will also apply added pressure to the UK raise its own rates.

For time being, the UK government will need to ensure that the country’s economy is in a fit enough state to support a rate hike and not become complacent about internal and external factors that could harm economic stability.