International Monetary Fund's Managing Director Christine Lagarde has said that a possible interest rate hike by the US Federal Reserve could pose risks to market stability in emerging economies, including India, even if it is well managed by central banks. In her address at Reserve Bank headquarters in Mumbai yesterday, she said uwinding of monetary stimulus is likely to start later this year. Ms Lagarde said, United States will raise short term interest rates later this year and even if this process is well managed, the likely volatility in financial markets could give rise to potential stability risks. Ms. Lagarde warned that if market volatility materialises, central banks need to be ready to act. Temporary, though aggressive, domestic liquidity support to certain sectors or markets may be necessary, along with targeted foreign exchange interventions, she said. Elaborating on the implications for India, the IMF chief referred to the findings of an internal study, which indicated that there are many benefits still to be reaped from further financial development in most emerging markets, including India. Ms Lagarde lauded India's record in promoting good practices, which she said has been positive in recent times.