Jay Powell said a U.S. recession is “certainly possible” and warned that avoiding a recession now depends largely on factors beyond the Fed’s control.

In testimony to the Senate Banking Committee on Wednesday, the Fed chairman acknowledged that it is now more challenging for the central bank to root out soaring inflation while maintaining a strong job market.

He believes the U.S. is resilient enough to withstand tougher monetary policy without slipping into recession, but acknowledges that external factors such as the war in Ukraine and China’s Covid-19 policies could further complicate the outlook.

“It’s not at all what we expected, but it’s certainly possible,” Powell said in response to a question about the risk that the Fed’s rate hikes this year could lead to a recession.

He added that because of “events that have occurred around the world over the past few months”, the central bank is “now much harder” to achieve its 2 percent inflation target and strong labor market.

“The question of whether we can achieve this will depend in part on factors beyond our control,” he said, referring to a surge in commodity prices due to Russia’s invasion of Ukraine and blockages in supply chains due to China’s blockade.

Lawmakers have repeatedly pressured Powell for the Fed to take recent steps to address the burden of inflation, which is at 8.6%, the highest in 40 years. The central bank last week hiked interest rates by the most since 1994, a sign that it supports the most forceful move to tighten monetary policy since the 1980s.

“You know what’s worse than high inflation and low unemployment? It’s a recession with high inflation and millions of people out of work,” said Sen. Elizabeth Warren, a progressive Democrat from Massachusetts. “I want you to reconsider this before pushing the economy off a cliff.”

In another exchange, Powell said there is considerable risk that inflation will become entrenched if the Fed does not act to restore price stability.

“We know from history that this will hurt the very people we want to help, the low-income people who are suffering from high inflation right now,” he said. “It hurts them more than anyone. We can’t fail this mission.”

Fears of a possible recession have grown following weaker-than-expected inflation data this month. While Powell insisted that the U.S. economy is “very strong and well-positioned to handle tighter monetary policy,” he acknowledged that “further inflation surprises are likely.”

“As a result, we need to be flexible with incoming data and changing outlooks, and we will try to avoid adding to uncertainty during an already challenging and uncertain time,” he said.

Traders expect the benchmark federal funds rate to hit about 3.6% by year-end, a rise that has led to a broader rise in borrowing costs globally. Powell said on Wednesday that tightening financial conditions had had the expected impact and dampened demand.

Powell’s testimony came at a pivotal moment for the White House, which is grappling with growing expectations of a sharp slowdown in growth ahead of the November midterm elections. Since then, many economists have projected a recession next year.

“A recession is not inevitable,” U.S. President Joe Biden told reporters this week — a message echoed by U.S. Treasury Secretary Janet Yellen and National Economic Council Director Brian Diess.

Federal Reserve officials have begun preparing for market participants to raise rates by at least 0.75 percentage point at their next meeting in July. Powell said on Wednesday that the Fed needs to see “compelling evidence” that inflation is slowing before easing efforts to raise interest rates.

Powell said future decisions about the Fed’s actions would be made “meeting by meeting.”