The Federal Reserve hiked its benchmark interest rate by 50 basis points Wednesday, marking the seventh hike of the year in the committee’s efforts to battle inflation. The federal funds target rate is now between 4.25% and 4.5%, the highest it has been since the start of 2008.

The less aggressive half-point rise in December follows four straight meetings where the Open Market Committee opted for three-quarter-point hikes. In June, 75 basis points was the largest rate hike in 28 years. By November, the move was borderline banal. But the slowdown in monetary tightening in December is a signal the Fed is seeing impacts of its hikes on the economy, despite indicating ongoing increases in the rate are necessary.

On Tuesday, the consumer price index showed an annual rise of 7.1% for November, two percentage points lower than June’s peak of 9.1%. However, despite the welcome decline, the current inflation rate is still historically high. Outside of this past year, consumer prices have not reached this rate since 1982.

The Fed’s more closely-watched inflation measure, personal consumption expenditures, hit a 6% annual increase in October, exactly three times the Fed’s target inflation rate of 2%.

“The inflation data received so far for October and November show a welcome reduction in the monthly pace of price increases, but it will take substantially more evidence to give confidence that inflation is on a sustained downward path,” Federal Reserve Chair Jerome Powell said.

This is the Federal Reserve’s final Open Market Committee meeting of the calendar year. The next 2-day meeting will convene Jan. 31 with a possible rate hike announcement on Feb. 1, 2023.

“I would say it’s our judgment today that we’re not sufficiently restrictive policy stance yet is why we say that we would expect that ongoing hikes will be appropriate,” Powell said.

The Fed said in moving further into restrictive monetary territory, it will keep in mind the cumulative tightening along with lagging effects of its policies on the economy and inflation. However, the committee noted that there is still modest growth in spending in the U.S., along with robust job gains and low unemployment, while inflation remains too high.

In a survey of economic projections, Fed members overwhelmingly forecast that the target rate would climb above 5% in 2023. They also project unemployment will rise to 4.6% in the coming year, nearly a point higher than it is today.

“There will be some softening in labor market conditions,” Powell said. “I wish there were a completely painless way to restore price stability. This is the best we can do.”