Mubasher: The Bank for International Settlements on Sunday called on the world's major central banks to increase interest rates.

Turbulences in global financial markets will need to be tackled along the way, Reuters reported, citing the BIS, which is a banking body for leading central banks.

Global growth may be seen on long term average levels after sentiment improved last year, the BIS said in an annual report, described by Reuters as "one of its most upbeat annual reports for years".

"Since we are now emerging from a very long period of very accommodative monetary policy, whatever we do, we will have to do it in a very careful way," BIS's head of research, Hyun Song Shin, told Reuters.

Although risk remains due to growing debt levels and low productivity growth, the BIS stated that policymakers should utilise "the improving economic outlook and its surprisingly negligible effect on inflation to accelerate the "great unwinding" of quantitative easing programmes and record low interest rates."

Shin added that "If we leave it too late, it is going to be much more difficult to accomplish that unwinding. Even if there are some short-term bumps in the road it would be much more advisable to stay the course and begin that process of normalisation."

He highlighted that if left unattended, removing the challenges, or "bumps" as he called them, will be "very difficult, if not impossible".

While good communication between central bankers will be important, coping with any turbulence will be more important, the BIS official added.

The BIS specified four main risks to the global outlook in the medium-term, namely a sudden surge in inflation, forcing higher interest rates and impeding growth, "financial stress linked to the contraction phase of financial cycles, a rise in protectionism and weaker consumption not offset by stronger investment."