Rodrigo Rato, the next head of the International Monetary Fund, said Tuesday the United States should use its current economic prosperity to gain control of its soaring budget deficits.

He predicted that any increases in interest rates by America’s Federal Reserve would be moderate.

Rato signaled no change in IMF policy during his first Washington news conference since he was selected last week by the group’s executive board to succeed Horst Koehler as managing director.

Spain’s former finance minister said he would formally take over as head of the 184-nation lending institution in early June. But before he officially takes over, Rato said he planned to attend a meeting of finance officials of the Group of Eight leading industrial countries and Russia, who are meeting later this month in New York.

In addition to lecturing the United States to use the current period of strong growth to begin dealing with the federal budget deficit, Rato urged countries in Europe and Asia to keep pushing ahead with their economic reform efforts.

“We are appreciating right now an upswing in the world economy in most of the member countries, but that doesn’t mean we don’t have some risks that we should follow and analyze,” he said.

Asked about the slide in financial markets in the United States and other countries as investors grow nervous about the possibility of higher interest rates, Rato said he believed markets were overreacting.

He predicted that the upcoming increase in interest rates on the part of the Federal Reserve would be small movements rather than an abrupt change because inflation currently remains very low in the United States even with the recent increases in interest rates.

“I think the prospect for the future is for an orderly and not at all extreme modification of the monetary stance (on U.S. interest rates) toward a more neutral situation,” Rato said.

Many private economists in the United States now believe with two consecutive months of strong job growth in the United States, the Fed is likely to begin raising rates at its next meeting June 29-30.

But they are forecasting that the Fed’s target for the federal funds rate, the interest that banks charge each other, will go up only by quarter-point moves. Stock prices have been battered in recent days because of investor fears of greater rate increases.

Rato also praised Saudi Arabia for its call on Monday for the Organization of Petroleum Exporting Countries to increase oil production to deal with a sharp rise in global oil prices.