Kaushik Basu said emerging economies would be hit hardest if the US central bank decided to raise rates from their record low of between 0pc and 0.25pc for the first time in nine years.
“I don’t think the Fed lift-off itself is going to create a major crisis but it will cause some immediate turbulence,” Mr Basu told the Financial Times.
“It is the compounding effect of the last two weeks of bad news with that [China devaluation] . . . In the middle of this it is going to cause some panic and turmoil.
“The world economy is looking so troubled that if the US goes in for a very quick move in the middle of this I feel it is going to affect countries quite badly.”
A weaker than expected increase in jobs last month meant the Federal Reserve’s decision on whether to raise interest rates this month was too close to call, analysts said last week.
Markets now believe there is a 34pc chance the Fed will raise rates this month, up from 30pc just before the data were released.
Jim O’Sullivan, chief US economist at High Frequency Economics, said consensus at the Fed to tighten monetary policy was not far away.
“Allowing for the tendency for August to be underreported initially, the employment data generally look more than strong enough to support the start of Fed tightening at this month’s meeting. Nonetheless, we expect officials will hold off for now due to the risks raised by weakening in global growth and turmoil in markets,” he said.
“We expect they will be tightening very soon.”
Premature Fed rate hikes could threaten the world’s emerging markets, many of which have large amounts of dollar-denominated debts.
When former Fed chairman Ben Bernanke made moves towards ending the Fed’s QE purchases in 2013, the threat of a higher US dollar caused turmoil in foreign exchange and debt markets.