Christine Lagarde, head of the International Monetary Fund, has urged the world's major central banks not to withdraw their unconventional support for weak economies too soon.

The IMF managing director said on Friday that stimulative policies are still needed in key regions, especially Europe and Japan, which have struggled with prolonged weakness.

Central banks must carefully develop strategies for scaling back their efforts to keep borrowing rates low, Lagarde said while speaking at an annual economics conference by the Kansas City Federal Reserve Bank in Jackson Hole, Wyoming.

Any pullback should be determined by the strength of individual economies, she said.

"Unconventional monetary policy is still needed in all places it is being used, albeit longer for some than for others," Lagarde said in her speech to the conference.

Her comments come as the Federal Reserve is signalling that it could slow its bond purchases later this year if the US economy continues to improve.

The Federal Reserve's bond buying has helped keep US interest rates near record lows.

'Deeper reforms'

The anticipation of a slowdown in Fed bond buying has unsettled US stock and bond markets and sent interest rates up.

Rising US rates have, in turn, triggered turmoil in some emerging economies, such as Turkey, India and Indonesia.

IMF condemns US budget cuts

Officials in those countries have tried to halt declines in the value of their currencies as investors have shifted money into higher-yielding investments elsewhere.

Lagarde took note of the market declines that have followed Federal Reserve Chairman Ben Bernanke's signal in June that the Reserve could begin slowing its bond purchases later this year if the US economy strengthens further.

She said finance officials should prepare contingency plans in case market turbulence worsens.

In her speech, Lagarde said the support being provided by major central banks is buying time for nations to implement key economic reforms.

"Push ahead with deeper reforms to lay the foundation for durable and lasting growth," Lagarde said. "Do not waste the space provided by unconventional monetary policies."

Lagarde said some emerging market countries have taken steps to prepare for the shocks that could occur as the US and other major economies withdraw their extraordinary support and borrowing rates rise to historically normal levels. 

Source: Agencies