Policymakers at the US Federal Reserve have decided to raise their key interest rate by just a quarter of a percentage point. They are slowing the pace of rate hikes as inflationary pressure seems to be easing.

Inflation rose last year more than 9 percent -- a level not seen in 40 years. Policymakers responded with a series of rate hikes of 75 basis points, which some called "aggressive." Inflation is now down to 6.5 percent.

On Wednesday, policymakers in Washington announced a rate hike of 25 basis points, marking the second consecutive meeting in which they have slowed the pace of rate hikes. In December, the hike was 50 basis points.

Fed Chair Jerome Powell said, "We can now say, I think for the first time, that the disinflationary process has started. We can see that and we see it really in goods prices."

Powell added that unemployment has fallen to its lowest level in 50 years. The trend of wage growth seems to be slowing. And consumers have grown more cautious about their spending.

However, Powell said it would be "premature to declare victory." He and his colleagues have now raised interest rates eight times in less than a year. And he signaled those hikes would be "ongoing."

He added that they need to get to a level they think is "appropriately restrictive."