Prices are still climbing much faster than Americans were used to before the pandemic, even though there are signs that the Federal Reserve's dramatic steps to slow down inflation may finally be working.

The central bank has made it clear it will do whatever it takes to bring inflation back down, and on Wednesday it raised interest rates for the seventh time in nine months.

Here are five takeaways from the inflation fight this week.

1. Inflation is coming down

After hitting a four-decade high of 9% in June, annual inflation dipped to 7.1% last month, according to the government's latest scorecard. That's the smallest annual price increase in 11 months.

Gasoline prices have dropped sharply and are now lower than they were before Russia's invasion of Ukraine. The prices of other goods like used cars and televisions have fallen, as pandemic kinks in the supply chain come untangled. And travel-related prices for things like airplane tickets and rental cars have dropped, as the pent-up demand that followed lockdowns has faded, and travelers become more price-conscious.

2. Inflation is still too high

While some prices have come down, the overall cost of living is still climbing much faster than it was before the pandemic. At 7.1%, the November inflation rate is well above the Federal Reserve's 2% target. It's also more than three times the rate of inflation in February 2020 - before COVID-19 led to the economy shutting down. The rising cost of services such as haircuts and restaurant meals is particularly worrisome, since that's largely driven by labor costs, which tend to be stickier than volatile food and energy prices.

3. Interest rates are going higher, but maybe not much higher

The Federal Reserve has been raising interest rates at the fastest pace in decades as it tries to tamp down demand and bring prices under control. Rising rates have made it more expensive for people to get a home mortgage or a car loan or to carry a balance on their credit card. The central bank's benchmark interest rate has jumped from near zero in March to just under 4.5% this week. But rates are now high enough to begin constraining inflation, and the Fed has indicated it may not push them much higher. This week's rate hike of half-a-percentage point was smaller than the last four. On average, Fed policymakers think rates will top out next year at just over 5%.

4. Interest rates aren't coming down any time soon

Just because the Fed has slowed the pace of rate hikes doesn't mean borrowing costs will come down any time soon.

"I wouldn't see us considering rate cuts until the committee is confident that inflation is moving down to 2% in a sustained way," Fed Chairman Jerome Powell said on Wednesday.

Fed policymakers aren't projecting any reduction in interest rates in 2023, and seven of the 19 members of the Fed's rate-setting committee think rates will be higher at the end of 2024 — two years away — than they are now.

5. There's still a lot of uncertainty about where the economy is headed

The central bank has lowered its forecast for economic growth next year and raised its forecast for unemployment. But Powell says there's considerable uncertainty.

"I don't think anyone knows whether we're going to have a recession or not and if we do, whether it's going to be a deep one or not," he said on Wednesday.

Changes in the weather or the war in Ukraine could cause big swings in prices at the gas station and the grocery store. Faster or slower economic growth around the world could also cause gyrations in the price of crude oil and other commodities.

The price of services is heavily dependent on what happens to wages. That depends in turn on how many jobs the country adds each month, how many workers are available to fill those jobs, and how productive workers are when they're employed.

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