Business · Markets · 4 hrs ago
Bowman warns AI investment shortfalls could trigger a stock correction
Federal Reserve Governor Michelle Bowman warned in Washington that financial-market risks could hurt the US economy.
She said stocks could fall sharply if AI investments disappoint, after investors and companies have made large bets on the technology.
Bowman also warned that rising longer-term interest rates could put further pressure on housing and small-business investment.
Lower stock prices could weaken consumer spending, she said, making a market downturn a risk beyond investors themselves.
Persistent inflation may leave the Fed more work to do, and Bowman said she could support raising interest rates at the central bank’s final meeting of the year in December.
Fed officials held rates steady at their October meeting after raising them in September, and the next decision will depend on how economic conditions develop.
Federal Reserve Governor Michelle Bowman warned that disappointing returns on artificial intelligence investments could trigger a sharp fall in stock prices.
She said lower equity prices could weaken consumer spending, while higher long-term interest rates could strain housing and small-business investment.
Bowman also said inflation had been more persistent than she expected and indicated she could support raising interest rates at the Fed’s next meeting.
She highlighted the rapid growth of AI-related debt, including corporate bonds, private credit and project finance.
- Who
- Federal Reserve Governor Michelle Bowman.
- What
- She warned that AI investment returns falling short of expectations could prompt a large correction in stock prices.
- When
- Tuesday; the article was published on November 10, 2026.
- Where
- Washington.
- Why
- She said disappointing AI returns could hurt equity valuations and economic activity. She also cited persistent inflation and risks from rising AI-related debt.
This story does not have two clearly opposing sides.
The Fed raised interest rates by a quarter percentage point, its first rate hike since 2023.
Fed officials left interest rates unchanged.
Bowman warned of risks from AI investments and persistent inflation in remarks in Washington.
The Fed is due to hold its final meeting of the year, where Bowman said she could support an interest-rate hike.
- Speaker
- Michelle Bowman, Federal Reserve governor
- AI debt
- On track to exceed $800 billion this year
- September rate move
- Quarter-percentage-point increase
- October Fed meeting
- October 27-28
- Inflation target
- 2%
What people are saying
a large correction in equity valuations
Lower equity prices could undermine the resilience in consumer spending
Today I am seeing signs that inflation pressures are persisting, while labor market conditions appear to be firming
the Fed should consider raising rates by a larger, half percentage point at its next meeting in December