Washington | The US Federal Reserve cut interest rates by half of a percentage point and signalled more reductions would follow, in an aggressive start to a policy shift aimed at bolstering the American labour market.

The Fed cut the overnight rate to a 4.75 to 5 per cent range in the first reduction since 2020, even though inflation “remains somewhat elevated”. The decision drew the first dissent since 2005 from a board governor, Michelle Bowman, who favoured only a quarter of a percentage point cut.