Growth and job creation are the major challenges for the global economy while the low interest rate environment presents a risk, the International Monetary Fund's (IMF) deputy managing director Zhu Min told CNBC on Tuesday.
It's important for central banks to keep interest rates low amid weak global growth but the rise in risk appetite amid ample liquidity is a concern, Zhu said.
"We see long-term uncertainty for the people looking for yield... or for the returns in the market," said Zhu. "[It's] important to observe the risks associated with low interest rates."
Interest rates at major central banks including the Federal Reserve, the European Central Bank and the Bank of England are currently at record lows.
The two biggest economies
The timing of a Fed rate hike has been the subject of much debate this year. It's uncertain whether the Fed will act in the first or second half of 2015 but whatever happens, Zhu doesn't expect the central bank to take markets by surprise.
"I don't think we will see rates rising very soon and very quickly because growth is still relatively weak," he said. "Growth inthe first half of the year was surprisingly weak."
Meanwhile, Zhu seemed upbeat on the Chinese economy despite IMF director Christine Lagarde's warning of a potential hard landing in April.
"Overall the Chinese economy runs quite well, and we expect the Chinese growth rates for this year [at] roughly from 7.2 to 7.5 [percent]," he said, noting that low inflation of 2.3 to 2.4 percent would help.