The November Personal Consumption Expenditures (PCE) price index came in lower than expectations, declining 0.1 percent month-over-month. Core PCE inflation grew 3.2 percent, which was below estimates of 3.3 percent.

Yahoo Finance's Jennifer Schonberger discusses the data and what this cooling inflation may mean for the future of the Federal Reserve's rate hikes. For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

SEANA SMITH: Fresh reading on the Federal Reserve's preferred inflation measure out this morning. Personal consumption expenditures, or the PCE price index for the month of November, coming in lower than expected. It's the latest sign of cooling inflation. Core PCE, which excludes food and energy, growing 3.2% below the Street's expectations of 3.3%. Yahoo Finance's Jennifer Schonberger has the latest on that for us. Jen.

JENNIFER SCHONBERGER: Good morning, Seana. May be time for the Fed to start dusting off its shears. As you said, its preferred inflation gauge clocking in lower than expected at 3.2%. Putting that in perspective, we were at 3 and 1/2 on this same gauge in October, and over 4% in the middle of the year back in July. Now, I also want to bring attention to the 6-month annualized number because that is now below target. 1.9% for the month of November.

All of this underscoring that Fed Chair Powell's dovish pivot last week is perhaps a bit more understandable now. The Fed has, as you know, priced in three rate cuts for next year, even as officials have tried to spill cold water on it this week, saying that either they're not talking about rate cuts or it's too soon for them to consider them or too many. But this data underscores that inflation is falling in line, or perhaps, even faster than what the Federal reserve expected.

Richmond Fed President Tom Barkin told me earlier this week, he needs to see more consistency, more conviction in the data, and that if inflation data cools as expected, then the Fed would act appropriately. Well, we are starting to actually get that data. And I also just want to point out there was a data point that may have been swept under the rug yesterday. We got a revision on third quarter core PCE. It's now at the Fed's target. 2%. So 2% for the months of July, August, and September this coming on top of the 3.2% reading, which will probably get revised down lower as well for the month of November.

All of this, as you mentioned, very good news for investors. Christmas coming early, will it cause and prompt the Fed to cut rates starting in March as investors expect. The Fed probably wants to see even more conviction and more downward trends on this before they would consider that. So perhaps, June, may be more plausible. But of course, we will watch the data. We will get another read on this in late January. Back to you.