Jim Rogers: Interest rates are dangerously low

China and other global economies should increase interest rates to contain a surge in inflation, said investor Jim Rogers, chairman of Rogers Holdings.

"Everyone should be raising interest rates, they are too low worldwide," Rogers said in a phone interview from Singapore. "If the world economy gets better, that's good for commodities demand. If the world economy does not get better, stocks are going to lose a lot as governments will print more money."

China's central bank hasn't increased rates since November 2007. In the U.S., the Federal Reserve this month left the overnight interbank lending rate target in a range of zero to 0.25 percent, where it's been since December 2008, while the European Central Bank has kept its key interest rate at a record low of 1 percent.

Policy makers in Malaysia, South Korea, Taiwan, and Thailand have increased the cost of borrowing at least once this year, while India has boosted rates four times in five months.

The global economy is at the risk of prolonging a recession after reports over the past two days showed U.S. home sales plunged by a record and Japan's export growth slowed for a fifth month in July, he said.

"We never got out of the first recession," Rogers said. "If the U.S. and Europe continue to slow down, that's going to affect everyone. The Chinese economy is 1/10 of the U.S. and Europe and India is a quarter of China, they can't bail us out."

Rogers, who predicted the start of the global commodities rally in 1999, said he was short emerging markets and stocks and long on commodities.

"Commodities will go above their old high sometime in the next decade even if they only grow 5 to 6 percent annually," said Rogers, who is a consultant for the Dalian Commodity Exchange.

Rogers said he would resume buying China's stocks if they were to tumble as they did during the aftermath of the global financial crisis in 2008, when they plunged 65 percent. "I haven't bought since the fall of 2008," he said. "It it were to happen again, I hope that I'm smart enough to buy again."