In remarks at the Second-Chance Lending Forum, Federal Reserve Board Governor Michael Barr said he would support a decisive interest rate increase if inflation does not moderate sufficiently. If incoming data instead provide confidence that inflation is moving toward 2%, he would favor taking more time to assess the policy stance. Barr described the labor market as stable and economic growth as solid, but warned that inflation remains too high after progress stalled in 2025 amid tariffs, conflict in the Middle East and rapid artificial intelligence investment. Barr also called for broader access to credit, business networks and technical assistance for entrepreneurs with criminal records. Federal Reserve survey data show that people with previous convictions are less likely to have bank accounts or credit cards and rely more heavily on alternative financial services. Those who have experienced incarceration are 16 percentage points less confident about credit approval but 10 percentage points more likely to have applied for credit, indicating that limited supply rather than weak demand contributes to their exclusion. Cash flow underwriting, alternative financial data and AI-supported tools could expand access for applicants with thin or impaired credit histories, including through second-look lending programs. Barr called for pilot programs, creditworthiness data and long-term evaluations to identify effective and scalable entrepreneurship support, while stressing that AI-generated financial advice must be accurate and comply with consumer and investor protection laws.

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