Pershing Square’s Bill Ackman on Monday sounded alarms on the economy, which he believes has begun to decelerate on the back of aggressive rate hikes.

“[T]he Fed is probably done. I think the economy is starting to slow,” Ackman said on CNBC’s “Squawk Box.” “The level of real interest rates is high enough to slow things down.”

In a bid to fight stubbornly high inflation, the Federal Reserve has taken interest rates to the highest level since 2006, while signaling borrowing costs will stay elevated for longer. The central bank last month forecast it will raise rates one more time this year. Many on Wall Street have grown worried about a recession as the economy feels the lag effects from massive tightening measures undertaken since March of last year.

“High mortgage rates … high credit card rates, they’re starting to really have an impact on the economy,” Ackman said. “The economy is still solid, but it’s definitely weakening. Seeing lots of evidence of weakening in the economy.”

The billionaire hedge fund manager said he believes long-term Treasury yields could shoot even higher in the current environment. He sees the 30-year rate testing the mid-5% and the benchmark 10-year approaching 5%. Ackman said he’s still shorting the 30-year Treasury bills as a hedge.

The 10-year Treasury note Monday yielded 4.64% after touching a 15-year high last week, while the 30-year on Monday yielded about 4.76%.

“The 30-year Treasury is likely to go higher,” Ackman said. “I don’t know that the 10 year has to go meaningfully above 5% because you’re seeing some weakness in the economy. But on a long term basis, we think structural inflation is going persistently higher in a world like that.”

Ackman said investors who have borrowed short term at a low fixed rate and are getting repriced, especially in the commercial real estate market, are going to have a “very challenging period.”

“I think that’s really the big threat,” he said.

U.S. regulators recently approved Ackman’s unique SPAC structure — called “SPARC,” a special purpose acquisition rights company — in which he will inform investors of a potential acquisition planned for the SPAC before they are asked to pledge funds.