To The Moon

The Federal Reserve's interest-rate decision this week looks more difficult than it should be. The real question isn't how much to cut, but where rates ought to be. The answer is much lower. That argues for a half-point cut.The case for a bigger cut starts by examining why the Fed's short-term rate target is now 5.25% to 5.5%, the highest since 2001. The Fed pushed it there last summer because underlying inflation was well above 3% and, with the labor market overheated, the Fed was afraid it would get stuck there. It was willing to cause a recession to prevent that.Fast forward to today, and some key underlying measures of inflation are below 3%, some within range of the Fed's 2% target. The labor market is cool, if not actually cold. A recession now serves no useful purpose.True, there isn't much evidence a recession is in the offing. But waiting for that evidence is tempting fate.That is restrictive by any measure. Fed officials think the "neutral" real rate, one that pushes employme