The slump in the US housing market will prove a "significant drag" on economic growth, Federal Reserve chairman Ben Bernanke has warned.
Financial markets had stabilised since this summer's turbulence, he noted, but the full effects of the credit squeeze may not yet have been felt.
The Fed moved to restore confidence in financial markets by cutting interest rates by a half point last month.
Mr Bernanke pledged to act "as needed" to underpin the economy.
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