Policymakers at the US Federal Reserve have been doing everything they can to bring down prices for consumers. Now, they are seeing signs that their battle against inflation is having an effect. A key economic indicator shows that price gains are easing.

Policymakers keep their eye on a gauge of inflation from the Commerce Department called the PCE price index, which tracks the cost of a variety of goods and services. On Friday, the index suggested that prices in May continued to rise. However, the rate of increase slowed down to 3.8 percent, which is the smallest year-on-year gain since April 2021.

Policymakers have been trying to rein in inflation with an aggressive program of interest-rate hikes. In June, they paused the increases to gauge their effect on prices. However, Fed Chair Jerome Powell suggested on Wednesday that their work isn't done yet.

Powell said, "I think widely it's been surprising that inflation has been this persistent. But I think the bottom line is that policy hasn't been restrictive enough for long enough to start to see those effects."

Powell added that he believes "more restrictions" are coming and that consecutive rate hikes are not "off the table."