Fed minutes said some participants, in a financial stability discussion, flagged
vulnerabilities tied to financing for rapid expansion of AI-related
infrastructure. They noted elevated AI equity valuations reflect market optimism
on long-term earnings and warned a sharp downgrade of those prospects could
trigger broad asset repricing, tighten financial conditions and strain financial
institutions with direct or indirect exposure. Two participants also discussed
how heightened U.S. Treasury price volatility could harm the financial system
and ways to reduce the likelihood of such events.
