Inflation skeptics who have been betting against new Federal Reserve Chairman Kevin Warsh have once again been proven wrong, according to Larry Kudlow. June inflation figures turned negative, and July data came in nearly flat across both consumer and producer prices.

The Producer Price Index registered 0.0 percent for July, bringing the three-month annualized rate to 1.3 percent. The Consumer Price Index rose at a modest 0.5 percent annual rate over the same period. Regardless of how the data is analyzed, disinflation has taken hold this summer. Monthly PPI readings at or below zero are relatively rare outside of recessionary periods, making the back-to-back soft figures a notable signal for policymakers and market participants who use wholesale price trends as an early indicator of downstream consumer inflation.

Under the older PPI methodology—before the Bureau of Labor Statistics revised the index and when it more directly reflected wholesale prices—the figures showed two consecutive negative readings in June and July, with a 0.7 percent annualized increase over the trailing three months.

This does not signal the inflation fight is finished, but it does indicate that Warsh was correct in holding the Fed's target rate steady during his initial months in office. The chairman remains committed to returning inflation to the Fed's 2 percent target—an objective his predecessor, Jay Powell, was unable to achieve over five years. Steady-rate decisions carry significant stakes for the broader economy: maintaining rates too long risks constraining credit growth and business investment, while easing prematurely could allow inflation pressures to reassert.

As the Wall Street Journal editorial board noted, Warsh has abandoned the practice of "forward guidance," arguing that it is unnecessary and that attention should center on actual data rather than public commentary from numerous Federal Reserve regional presidents. The chairman has also refrained from leaking policy intentions to selected reporters. The shift carries practical consequences for financial markets, where investors had grown accustomed to using Fed signals about future rate moves as a key input for asset allocation and risk pricing. Without that explicit policy roadmap, market participants must place greater weight on incoming economic data releases, potentially increasing short-term volatility around data prints.

For broader context, the Cleveland Fed's median CPI over the past 12 months stands at 2.7 percent, while its 16 percent trimmed mean is 2.6 percent. Warsh monitors these alternative measures closely. The Fed is therefore expected to maintain current rates for the foreseeable future as it evaluates whether underlying inflation converges with the 2 percent goal. Officials may also continue reducing the central bank's balance sheet holdings of Treasuries and Treasury-backed securities—a process that withdraws liquidity from the financial system and serves as an additional tool for tightening monetary conditions beyond the benchmark interest rate.

Amid this backdrop, the S&P 500 stock index reached a new all-time high of 7,800. Disinflation generally reduces uncertainty for corporate earnings and household spending, both of which support equity valuations, and the cooling price data has provided a constructive environment for risk assets. President Trump highlighted the milestone on Tuesday night, stating: "The country is doing well. The stock market, a fantastic record. We have 79 records so far in a short period of time."

According to Gallup polling, approximately 58 percent of American adults—roughly 156 million people—own equities in some form, whether through index funds, ETFs, IRAs, brokerage accounts, bank accounts, or union pension funds. The breadth of that ownership means that market performance has direct implications for household financial security and retirement readiness across income levels, not just for institutional or high-net-worth investors. Kudlow emphasized that market participation extends well beyond wealthy investors, encompassing ordinary working people across the country.

The market's strong performance this year has been driven by robust growth in high-tech and manufacturing-related sectors, trends Kudlow attributes to Trump-era economic policies. With midterm elections approaching, Kudlow suggested that the combination of record stock market levels and broad-based ownership could bolster political support for free-market policies. Whether that dynamic translates into electoral outcomes will depend on factors beyond equity prices alone, including wage growth, inflation perceptions, and voter sentiment in competitive districts.