Rate Cut? Don’t Hold Your Breath

Hate to buck the markets, but:

Treasury man Henry Paulson told finance ministers and central bankers at the G20 in Cape Town, South Africa, that the greenback is undervalued. A week earlier President Bush said the same thing.

Fed chair Ben Bernanke has put headline inflation (including food and energy) on his key target list. Well, the CPI headline was 3.5 percent over the last 12 months. That’s 150 basis points above the Fed’s 2 percent inflation target-lite.

So for all those Wall Streeters looking for a fed rate cut at the December 11 meeting, don’t hold your breath. Inflation is too high, the dollar’s too low, and the economy is stronger than you think.