Federal Reserve Chairman Jerome Powell struck a hawkish tone during his semiannual congressional testimony on Tuesday, raising the odds of a bigger interest rate hike.

Powell told the Senate Banking Committee that the economy has remained more resilient than expected amid higher rates and hinted that rates will rise even more than anticipated this year. That has made investors bet on a bigger rate hike at the Fed’s meeting later this month.

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Powell said the data “suggest that the ultimate level of interest rates is likely to be higher than previously anticipated. 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."

“Restoring price stability will likely require that we maintain a restrictive stance of monetary policy for some time,” he added.

Markets reacted immediately. Before Powell spoke, investors were pegging the odds of a 0.5 percentage point hike at the Fed's meeting this month at about 30%, according to CME Group’s FedWatch tool, which calculates the probability using futures contract prices for rates in the short-term market targeted by the Fed. They put the odds of a milder 0.25 percentage point increase at about 70%.

But as Powell testified, the odds flipped. As of Tuesday morning, the odds of a 0.5 percentage point hike rose quickly to more than 51%, while the chances of a milder hike have plunged to below 49%.

“We continue to anticipate that ongoing increases in the target range for the federal funds rate will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time,” Powell said Tuesday.

The economy added 517,000 jobs in January, shattering expectations, and the unemployment rate is now at 3.4% — the lowest since 1969. Meanwhile, a few recent inflation reports have shown that price increases are not slowing as effectively as the central bank has wanted.

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Powell has indicated that the labor market will need to soften some in order to drive down inflation and strong employment reports give the Fed more confidence to increase rates even more.

The Dow Jones Industrial Average dropped by 260 points as Powell spoke, and the S&P 500 has declined by more than 0.9%.