Infinite context reduction stack overflow

The contrived example below gets a Context reduction stack overflow error no matter how big you make the context reduction stack. I'm not sure whether this constitutes a fixable bug or not.

{-# LANGUAGE FunctionalDependencies, MultiParamTypeClasses #-}

import Control.Monad.State (StateT)

class C1 a b c | a -> b
class C2 a b c

data T b = T

f1 :: (Monad m, C1 a b c) => a -> StateT (T b) m a
f1 f = undefined

f2 :: (Monad m, C1 a1 b1 c1, C2 a2 b2 c2) => a1 -> StateT (T b2) m a2
f2 fm = f1 fm >>= return . undefined

Trac metadata

Trac field	Value
Version	7.0.3
Type	Bug
TypeOfFailure	OtherFailure
Priority	normal
Resolution	Unresolved
Component	Compiler
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