The IMF warned on Wednesday that an economic recession in the US remains “in the realm of possibility” despite encouraging data pointing to growth, Reuters reported.

The Fund’s first deputy managing director, Geeta Gopinath, said the IMF was surprised by the strength of the U.S. labor market and consumer spending, prompting the IMF to revise its growth forecasts for the country.

Her comments came shortly after the latest US inflation data showed signs of slowing.

“If you look at the latest data, you see some signs of a hardening. This gives us an opportunity to avoid a recession,” Gopinath said in Washington.

The IMF released its latest global economic outlook report on Tuesday, which said the US economy will grow 1.6% this year, compared with a forecast of 1% in 2022.

However, Gopinath noted that the US economy remains in a precarious position with little room for error.

If we look at our growth numbers, we see very weak growth in the US, so the risks of a hard landing remain,” she said.

When asked if this shift from growth to low or even negative growth could be caused by the Federal Reserve’s continued interest rate hikes, Gopinath said it was entirely possible.

“It’s very likely that things like this could happen,” she said.

However, she added that central banks have struck a good balance so far.

“This is a very difficult time for central bankers. I think at this point the Fed has been right to watch inflation and of course adjust as the data comes in,” she added.