THE FEDERAL Reserve Board, dropping its discount rate half a percentage point, is trying to lead the financial markets toward lower interest rates generally. But the verb is important. The Federal Reserve can lead markets, but it can't force them or issue orders to them. It customarily moves one step at a time, and then pauses to see whether lenders and borrowers are following.

On the upswing it raises the discount rate until investors see the economy slowing and other interest rates, set in the daily auction of the markets, begin to fall. On the downswing it often drops its discount rate until the market rates begin to rise. Currently it's trying to push the economy into a renewed cycle of growth, after the past several months' pause. If it follows past practice it will move the discount rate -- its own lending rate to banks -- down until the markets once again rebel and, as other lenders sense either better business or higher inflation ahead, begin to raise their own interest rates.

By its nature, a central bank can always act faster than the government's other levers of economic management, such as the cumbersome apparatus of taxing and spending. But currently, while the Federal Reserve acts, the rest of the administration limits itself to advice and criticism. The government's machinery for setting economic policy has, at present, only one moving part.

The administration is poorly equipped to deal with a business slowdown. Its internal forecasts of rapid, steady growth have become an article of faith, and any change in them would mean much more than adjusting a mere number. The nature of the budget discussions within the administration raises apprehensions of fiscal paralysis in the coming year.

The Federal Reserve's skill is notable, but too broad a job is being loaded onto it. Trying to guide a large and complex national economy through manipulation of the money supply and interest rates alone is bad practice. The Fed is not only being required to preside over the structure of money and credit, as central banks usually do. It is being required to make central decisions on levels of GNP, employment and inflation. It has acquired these responsibilities by default, because other elements of the government don't seem to be able to move. You have probably noticed that the volume of controversy over the Fed is high and rising. That's because this technical agency, the government's bank, finds itself making most of the day-to-day decisions that steer the economy.