The Producer Price Index (PPI) for the month of October came in hotter than expected, rising 0.2% month-over-month, as expected, and 2.4% year-over-year, compared to the 2.3% estimated. Wolfe Research chief economist Stephanie Roth sits down with Morning Brief Hosts Seana Smith and Brad Smith to discuss the print and what it says about the US economy and the Federal Reserve’s next move.

“Today's data was a little bit disappointing. It came in a little bit firmer, especially for financial services and airlines, which is what we look to gauge where core [Personal Consumption Expenditures] PCE is going to come in at the end of the month,” Roth tells Yahoo Finance.

The economist says, “The Fed probably still can cut in December. Their bias is toward cutting, but they'll probably have to have to go at a slower pace next year. So our base case is they'll cut at a quarterly cadence as opposed to every meeting.”

Roth outlines her base case that the Fed, going forward, will make three cuts in 2025 and then pause several meetings to assess President-elect Donald Trump’s proposed tariffs. She says that immigration and animal spirits are the key factors for the US economy in 2025. Looking ahead to 2026, Roth says tariffs will be the main focus as that’s when “Trump's real fiscal policies have an impact.”

To watch more expert insights and analysis on the latest market action, check out more Morning Brief here.

This post was written by Naomi Buchanan.