Apart from all the news about the Federal Reserve’s $2.5 billion Taj Mahal on the Potomac with its $700 million cost overrun — surely a monumental embarrassment to the central bank, with perhaps even stronger consequences down the line — there was much more constructive news coming from a superb speech last night in New York by a Fed governor, Christopher Waller.

Governor Waller became the first member of the Fed’s Board of Governors to break ranks with the Fed chairman, Jerome “Too Late” Powell, when he boldly stated that Fed policy is 125 to 150 basis points too tight, and advocated that the Fed should begin its policy easing and interest rate cutting right away, at its July 29-30 meeting.

And rumors are flying that, if Mr. Powell stubbornly clings to his ultra-tight money, Governor Waller and probably Vice Chairwoman Miki Bowman will end the Fed’s groupthink, and will instead register dissents from the board’s conclusion at the FOMC meeting at month’s end.

Of course, President Trump has been calling for lower rates for quite some time, and has been sandblasting Mr. Powell every chance he gets.

Governor Waller was a first-term Trump appointee, but his speech last night was no simple political statement.

Quoting my friends at Bretton Woods Research, Governor Waller presented a carefully built analytical case that consumer spending is weakening, private sector job growth is stalling out, and, most importantly, he took great pains to argue that tariffs are one-off increases in the price level and do not cause inflation beyond a temporary surge.

To quote from his speech, “standard central banking practice is to ‘look through’ such price-level effects as long as inflation expectations are anchored, which they are.”

Governor Waller believes a neutral policy rate would be 3 percent, but today it’s 4.5 percent. Therefore,150 basis points of rate cuts are in order.

I could actually make a case that market-based indicators suggest a neutral rate today of 2 percent.

The 10-year Treasury market rate is presently 4.5 percent, while the CPI breakeven is 2.4 percent. Which gives you a roughly 2 percent natural rate. And that could mean that the Fed’s target rate is 250 basis points, or 3 full percentage points, too high today.

But we can quibble over that another time.

The key point is: Chris Waller argues time and again in last night’s speech that a large share of tariff increases will not be passed on to consumers.

Tariff increases themselves are a one-time boost to prices but do not sustainably increase inflation, and actual inflation numbers, adjusted for tariffs, are presently close to the Fed’s 2 percent inflation goal.

And Governor Waller concludes that current tight money, led by Jay Powell, has got to be changed — beginning this month.