The U.S. economy is growing faster than expected, keeping inflation high, so a more aggressive pace of further interest rate hikes might be necessary, Federal Reserve Chair Jerome Powell said in his Semiannual Monetary Policy Report to Congress on Tuesday.

Rate increases haven’t forced the economy into a recession or even slowed it down that much, as U.S. consumers — who still mostly have jobs — are willing to spend.

Real estate has felt the impact of higher rates as deal volume declines. Multifamily assets, once the darling of investors, saw investment sales nationwide decline 71% in January 2023 compared with a year earlier. The industry had been banking on interest rate hikes stopping and perhaps even reversing course this year to turn that all around, but that is becoming less likely, according to the Fed.

“The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” Powell said in a prepared statement to Congress. “If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”

The remarks come about two weeks ahead of the next meeting of the Federal Open Market Committee, whose task it is to adjust rates for the federal funds rate, which sets the pace for the cost of capital throughout the financial system.

As it became clear in early 2022 that inflation was vexing the economy at rates not seen in 40 years, the Fed began raising rates faster than at any time since the 1980s. By the end of the year, the central bank had hiked rates by 4.5 percentage points. The pace has been slowing — the first four increases were by 0.75% each, followed by three 0.5% increases and a 0.25% increase one month ago.

Even so, inflation persists. The annualized inflation rate in the U.S. slowed only slightly to 6.4% in January 2023 from 6.5% in December. The rate peaked in June at 9.1%. The inflation numbers for February will be published in about a week, ahead of the next FOMC meeting.