Barr warns inflation still above target, urges focus on financial inclusion

Governor Barr told a conference that inflation remains above the Federal Reserve's 2 percent target and that the September FOMC meeting will again address the outlook for inflation and the appropriate policy stance. He said that if data show inflation is not moderating sufficiently, the Fed should act decisively to raise rates.

He described the current labor market as stable, with relatively low unemployment, solid economic growth, strong productivity and new-business formation, and consumer spending that has been largely resilient. He noted that the economy has been powered in part by a boom in AI-related investment and the buildout of AI capabilities.

Turning to financial inclusion, Barr cited the 2023-24 Survey of Household Economics and Decisionmaking, which found that people with a criminal record report lower financial well-being, reduced access to credit and higher rates of being unbanked than those without a record. He said the 2024 Small Business Administration rule that removed many criminal-history bars from SBA loan and loan-guarantee programs reflects research on the viability of entrepreneurship among this group.

Barr urged further research and highlighted existing models that pair lending with technical assistance, such as the Texas Prison Entrepreneurship Program's CDFI subsidiary, which has helped graduates launch more than 500 businesses. He also emphasized the role of Small Business Development Centers, community-development financial institutions, and local chambers of commerce in connecting entrepreneurs with credit, networks and skills.

He concluded that reducing employment and credit barriers for individuals with criminal records supports the Fed's dual mandate of maximum employment and price stability, and that the agency will monitor progress as part of its broader economic outlook.