(Reuters] – Federal Reserve Governor Christopher Waller stated that the Federal Reserve needs to consider how the U.S. market is doing as it establishes monetary policies. He also said there was no stopping higher home cost, and there seems to be no slowing down.

Waller stated that housing prices are increasing in inflation in America and that he would be looking more closely at real-estate to determine the right stance in monetary policy. He made these remarks in prepared remarks for the Rutgers University and Tel Aviv University webinars on housing.

The large share of inflation indicators that are attributed to real estate is significant. He also noted the importance of real property’s contribution to Gross Domestic Product. The Zillow Home Value Index shows that market rent has increased by more than 6.5% during the past two-years, while house prices have grown by 35% cumulatively since the COVID-19 pandemic.

Waller stated that while he was hopeful of some pandemic-related factors easing home prices and rents in the coming year or two, he cautioned that the overall rise in housing costs in “red hot” markets are due to demand exceeding supply. He also noted that Waller did not advocate excessive leverage and easy lending.

Waller did not speak specifically to the U.S. economy outlook and monetary policies in his speech. Waller stated that economic data suggest the central bank should increase the interest rate at its next policy meeting to reduce inflation. The Fed target of 6%, with a high above, is three times higher than the Fed’s.

Only economic uncertainty caused by Russia’s invasion of Ukraine prevented Waller from supporting the larger half-percentage-point increase he had been advocating for ahead of the Fed’s last policy meeting.

Fed policymakers have increased the overnight benchmark rate to 25%, a quarter of an percentage point above the March 16 level. They are closing the chapter on loose monetary measures that had been put in place to boost the economy’s recovery from the pandemic.

Since then, Jerome Powell (Fed Chair) and other central bank policymakers indicated that they are more open to raising rates by 50 basis point when they meet on May 3-4. This will allow them to increase their nearly $9 trillion balance.