CNBC's Steve Liesman with David Zervos, Jefferies chief market strategist, join 'The Exchange' to discuss today's PPI data, being on the Fed chair candidates list and the economy.

David Zervos, Chief Market Strategist at Jefferies, commented on recent inflation figures, noting that much of the volatility is concentrated in the services sector, while goods inflation remains subdued. He highlighted that similar or higher inflation numbers in the past did not prevent the Federal Reserve from cutting rates, and current data does not significantly alter his outlook.

Zervos maintains that monetary policy is already restrictive and supports a 50 basis point rate cut in the near future. He emphasized the importance of focusing on long-term trends rather than short-term data fluctuations and suggested that easing policy could help lower unemployment further. Zervos described the current situation as the final phase of the inflation battle.

Jefferies: This is the last little bit of the inflation battle

All right, let's officially now bring in David Zervos, Chief Market Strategist at Jefferies, as well as a CNBC contributor, also on the not-so-short list of 11 candidates who may replace Jay Powell. Welcome, David. That was a long introduction. It was. I mean, there's so many mantles which you carry these days. And a frequent guest here, which is how we know him. We don't really care about the numbers, though. What did you make of the number today? I don't make a lot of it. Steve said it's a very volatile number. There's some really quirky stuff on the services side. I think 80% of this game was in services. The good side was relatively tame. Also, if you look back at core PPI, the year-over-year figure, we were cutting rates when this number was even higher in Q4 of last year. So the September, October, November, December prints for that core PPI were higher than this 3.7 number that came out. So to be honest with you, and Jay was perfectly comfortable cutting rates then. He's not very comfortable with it now. I think a lot of this stuff is noisy. It doesn't make its way through to core PCE, doesn't make its way to core CPI. And we'll see that in the numbers ahead. And there's been a lot of very good news on inflation, at least to start the year, and certainly over the last couple of years as we've come from those incredibly high levels. So the narrative today that this number may give the Fed a reason to pause or to rethink cutting rates, any of that, along with CPI and the fact that services, that services side of CPI was greater than what had been anticipated and goods remained fairly tame. None of this changes your view about what the Fed should do. Well, you cast that in a very unusual way for me. I'm very, I have been over many years here at this table and other tables on the network, been very careful not to talk about what the Fed should do, because I've never really felt like what I thought the Fed should do mattered. I just tell you what I think the Fed will do. Now that's a little different, Melissa. So I think I'm sitting in a position with a very esteemed group of people, and I'm very honored to be there, where maybe what I think the Fed should do does matter. And we've had on this show, I think for the last six or eight Fed meetings, Kelly has asked about, you know, what you think, what you would do if you were there. We had a shadow committee. I think in the last three meetings I have said I would, I would say 50 basis points. I was one of the few. I think there might be one other in that shadow committee that they're putting up there. And I'm still there. I'm still absolutely there. I think there is a reasonable storyline, a very cogent storyline that suggests monetary policy is restrictive. It's gotten more restrictive. The arguments I put forward have been related more to the balance sheet and that contraction. But generally speaking, I don't see any reason why this number changes that view. So a 50 cut in September. After that, though, would you be open, would you be data dependent and open to the idea that tariffs may then translate into inflation later on and a few months down, which a lot of a lot of economists out there like a Jan Hatze is a Goldman Sachs or one which President Trump took issue with, but, you know, made the point that it could be the consumer that will be then handling the burden of tariffs down the road. Watch the evidence. I think I would be watching all the evidence, all the data carefully, recognizing that high frequency data is extremely volatile and does not portend longer term trends. But I think there's a very cogent case to be made that we are way above neutral in rates and that getting rates back toward neutral would bring in many, many jobs. We have a four point two percent unemployment rate right now. We had in 2019 a three and a half percent unemployment rate with very little inflation. There's no reason why we couldn't be going back there. Or I think with some of the supply side reforms going even lower than three and a half. So we've got a million jobs, maybe more on the table that could be brought to the brought in if we don't get too obsessed with this last little bit of the inflation battle. And I think it is the last little bit of the inflation battle.

Ukrainian President Volodymyr Zelenskyy met with British Prime Minister Keir Starmer in London on Thursday. This comes one day before U.S. President Donald Trump is set to meet with Russian President Vladimir Putin in Alaska.

London

Ukraine Invasion

Zelenskyy, Starmer meet ahead of Trump, Putin summit in Alaska

Florida Gov. Ron DeSantis has announced plans to build another immigrant detention center, dubbing it the "Deportation Depot." The facility will be in North Florida.

Jacksonville

DeSantis announces plan to build another immigrant detention center

President Trump had a virtual call Wednesday with Ukrainian President Volodymyr Zelenskyy ahead of his meeting with Russian President Vladimir Putin on Friday in Alaska. After the call, Zelenskyy said he told Mr. Trump that "Putin is bluffing."

Washington

Ukraine's Zelenskyy warns President Trump ahead of meeting with Putin

U.S. President Donald Trump said he would ask the Republican-controlled Congress to extend federal control of Washington's city police force beyond 30 days, escalating his campaign to exert presidential power over the nation's capital.

Trump wants to extend federal control over Washington police

With just hours left to reach a deal on plastics, negotiators in Geneva were scrambling to resolve a deadlock caused by “red lines” of member countries. Nations are crafting the first global, legally binding treaty on plastics pollution at the United Nations office in Switzerland.

Geneva

Global plastics treaty talks in Geneva stall as deadline looms

At least 123 people have been killed in 24 hours, according to Gaza's Health Ministry. Israeli Prime Minister Benjamin Netanyahu says people will be given the opportunity to leave Gaza before a planned ground offensive, but no one is being pushed out.

Jerusalem

Middle East Conflict

Israeli strikes pound Gaza ahead of planned ground offensive

America's NATO allies stood firmly with Ukrainian President Volodymyr Zelenskyy ahead of the face-to-face meeting between President Trump and Russian President Vladimir Putin in Alaska. The European leaders showed a united front that there should be no peace deal without Ukraine's involvement.

Kyiv

NATO allies stand with Ukraine ahead of Trump-Putin summit

U.S. Immigration and Customs Enforcement must improve conditions for detainees at New York's 26 Federal Plaza, a judge ruled Tuesday.

New York

Judge rules ICE must improve conditions for detainees at NY facility

National Guard troops arrived in Washington, D.C., following President Donald Trump's deployment and federalization of local police to crack down on crime in the nation's capital.

National Guard troops arrive in Washington, D.C.

U.S. President Donald Trump said that he had a "very good call" with Ukrainian President Volodymyr Zelenskyy, days before his scheduled Alaska meeting with Russian President Vladimir Putin.

Trump had 'very good call' with Zelenskyy ahead of Putin meeting

Israel's military chief of staff, Lt. Gen. Eyal Zamir, has approved the framework of a plan for a new offensive in Gaza. CBS News Middle East reporter Courtney Kealy has more details.

Israeli military chief approves 'framework' for new Gaza offensive

President Donald Trump said Wednesday there will be “very severe consequences” if Russian President Vladimir Putin doesn’t agree to stop the Ukraine war after Friday’s summit.

Trump warns of 'severe consequences' if Russia doesn't stop war

A Wisconsin woman on Tuesday was found guilty in the United Kingdom of trying to kill a man at point-blank range in 2019. Aimee Betro, 45, was part of a plot with two other co-conspirators to murder Sikander Ali, prosecutors said.

Birmingham

American woman found guilty of UK murder-for-hire plot

Record-high temperatures across Europe are fanning wildfires across the continent. Experts say a warming climate and an increase in flammable vegetation from rural depopulation are major factors.

Madrid

Historic heat fuels fires across Europe

Hungary's PM Viktor Orbán said the EU attempts to set conditions for a meeting to which leaders of the EU were not invited. He also called for an EU-Russia summit.

Brussels

EU leaders rally behind Ukraine ahead of Trump-Putin talks

President Trump said Monday he expects that Russia and Ukraine will "land swap" certain territories as part of an eventual ceasefire deal. Mr. Trump is set to meet with Russian President Vladimir Putin in Alaska on Friday.

Trump claims 'land swapping' between Russia, Ukraine will happen

Taylor Swift confirmed her 12th studio album, "The Life of a Showgirl," in a teaser for her upcoming appearance on her boyfriend Travis Kelce's podcast. Swift did not disclose the release date of the album.

Taylor Swift announces new album, 'The Life of a Showgirl'

U.S. President Donald Trump said that his planned meeting with Russian President Vladimir Putin in Alaska on Friday will be to "feel out" the leader as pressure mounts for Russia and Ukraine to make a peace deal.

Trump to meet with Putin in Alaska on Friday

A meeting between US President Donald Trump and Russian President Vladimir Putin is set to take place in Alaska, with European leaders notably excluded from the talks. Until Europe can defend itself, it's not likely to be invited to a great power dialogue, experts have told Euronews.

Alaska

Europe frozen out as U.S. and Russia prepare for Alaska talks

U.S. President Donald Trump said on Monday that Kyiv and Moscow will both have to cede land to end the war in Ukraine and talks with Russian President Vladimir Putin this week will instantly show whether the Kremlin leader is willing to make a deal.

Trump says both sides in Ukraine war will need to cede territory

A prominent Al Jazeera journalist, who had previously been threatened by Israel, was killed along with four colleagues and another journalist in an Israeli airstrike in an attack condemned by journalists and rights groups.

Israeli strike kills Al Jazeera journalists in Gaza

At last one person is dead, dozens are injured and two people are unaccounted for after an explosion at the U.S. Steel Clairton plant in Pennsylvania on Monday.

Clairton

At least 1 dead, dozens injured in U.S. Steel plant explosion

President Donald Trump has placed the Metropolitan Police Department under federal control and announced he's activating the National Guard to combat crime in Washington, D.C.

Trump deploying National Guard to Washington, D.C.

Ukrainian President Volodymyr Zelenskyy is thanking European leaders for backing his push to join this week's Trump-Putin summit in Alaska, insisting an end to the war must be fair.

Trump and Putin set to meet on Friday without Zelenskyy

U.S. President Donald Trump and Russian President Vladimir Putin are scheduled to meet in Alaska on Friday to discuss ending the war in Ukraine. Kyiv and its allies fear being sidelined and worry any deal could reward Moscow’s occupation of Ukrainian territory.

Ukraine fights for a seat at the table ahead of Trump-Putin summit

Israeli Prime Minister Benjamin Netanyahu is defending his decision to keep fighting in Gaza, despite protests at home and abroad. Debora Patta has the latest.

Tel Aviv-Yafo

Netanyahu defends plan to expand war in Gaza

Ukrainian President Volodymyr Zelenskyy is thanking European leaders for backing his push to join this week's Trump-Putin summit in Alaska, insisting an end to the war must be fair. Willie James Inman has more from the White House.

Anchorage

Countdown begins to Trump-Putin meeting, without Zelenskyy

Violent weather hit several Midwest states over the weekend, with high winds being blamed for the death of at least one person in Nebraska and flash flooding prompting a state of emergency in Milwaukee County, Wisconsin.

Milwaukee

Milwaukee inundated with floodwaters, one dead in Nebraska

Thirty-seven major wildfires are currently burning across nine states in the western United States. Firefighters have made significant progress on the Canyon Fire in California, achieving 62% containment and allowing over 4,000 residents to return home, with minimal property loss reported.

Breakdown