The International Monetary Fund has said world markets are still under strain from the US housing crisis. It also warned that rising inflationary pressures were making it tougher to set interest rates to keep the lid on prices without risking financial stability.
'Global financial markets continue to be fragile and indicators of systemic risk remain elevated,' the IMF said in an update of its semi-annual Global Financial Stability report.
The fund said that, at the moment, a bottom for the US housing market was 'not visible', though a decline in prices may make homes more affordable and that could eventually stabilise the market.
The Washington-based global financial institution, which estimated in April that losses in US assets due to the fallout from the sub-prime crisis could reach $1 trillion, said it had no reason to adjust that figure.
The IMF said there were concerns that the housing slump in other countries - including Ireland, Britain and Spain - could increase loan losses in the mortgage, construction and commercial property areas.
