Kevin Warsh said "prices are too high," the clearest hint yet that the Federal Reserve could raise interest rates, a shift that may slow a market where the S&P 500 and Nasdaq have climbed 22% and 28% in 12 months.
CME FedWatch now implies nearly a 90% chance of a rate increase by December 2026, reflecting concern that stubborn inflation will keep the Fed from leaving borrowing costs low.
Higher rates would hit a market heavily tied to AI expansion, where companies spent about $1 trillion on data centers in 2025 and are expected to quadruple that by 2030.
The risk is amplified because the top 10 S&P 500 companies now make up more than 40% of the index, and many of them—including Nvidia, Apple, Microsoft and Alphabet—are major AI spenders.
Warsh had told Congress a day earlier he would make high inflation "a thing of the past" without giving policy guidance, but his latest remarks suggest price stability may take precedence over supporting stocks.