The US Federal Reserve on Wednesday initiated a series of anticipated interest rate cuts with a notable half-percentage-point reduction.

The cut reduced the Fed’s benchmark policy rate from 4.75% to 5.00%.

Speaking at a press conference after the decision, Federal Reserve Chair Jerome Powell expressed satisfaction with the bold step, stating, “We made a good strong start, and I am very pleased that we did.” Powell emphasized the rationale behind the decision, pointing to the sharp decline in inflation over the past year.

“The logic of this, both from an economic standpoint and from a risk management standpoint, was clear,” he said.

The Fed’s decision signals a recalibration of monetary policy. The central bank acknowledges that inflation is under control while also seeking to protect the strong labor market from any potential weakening.

Powell, who has led the Fed since 2018, has emphasized a consensus policy. However, this latest decision saw a rare dissent from within the ranks.

Fed Governor Michelle Bowman voted against the larger cut, favoring a more modest quarter-percentage-point reduction, marking the first dissent from a Fed governor in nearly two decades.

In their forward projections, Fed policymakers anticipate further cuts, expecting the benchmark interest rate to drop by another half a percentage point by the end of 2024, a full percentage point by 2025, and another half a point by 2026.

However, they cautioned that long-term forecasts remain uncertain, given potential changes in economic conditions.