AI is the most cited financial stability risk, concerns about soaring stock prices - US Federal Reserve report

According to the latest Financial Stability Report released by the Federal Reserve on the 13th, when market participants were asked about shocks that threaten financial stability over the next 12 to 18 months, the most common answer was "artificial intelligence (AI)." There is a sense of caution about stock prices rising due to the AI ​​boom, and concerns about stock prices falling if corporate profits fall below expectations. Expanding AI investment, accelerating GDP US Federal Reserve likely to raise interest rates in December. AI-related investment, including the construction of data centers one after another, is a major driver of the U.S. economy. However, with interest rates on the rise, concerns have been raised that increased borrowing will put pressure on corporate finances. According to the Federal Reserve, the amount of debt related to related investments between January and October of this year was $680 billion (approximately 108.6 trillion yen), a five-fold increase compared to the whole of 2023. The survey also found that rapid adjustments in the prices of risky assets such as stocks, rising yields on long-term government bonds caused by multiple factors such as high energy prices, and cyberattacks associated with the spread of AI were also ranked high. In the previous survey in May, ``geopolitical risks'' was the most frequently cited response, due to factors such as the US-Iran conflict. This time he fell to 8th place. This survey was conducted in September and October targeting 23 institutions.

• ?What specific financial stability measures is the Fed considering?
• ?How much of an impact is the increase in bond issuance for AI-related investments actually having on corporate finances?
• ?Whether the interest rate hike will be implemented in December