PHOENIX— Federal Reserve Gov. Michael Barr used a speech at the 2026 National Community Investment Conference in Phoenix Tuesday to signal that financial institutions should expect the Fed to remain cautious on rate cuts while also underscoring the continued importance of the Community Reinvestment Act as a framework for banks’ community-development lending, investment and partnership activity.
Barr delivered the remarks at the conference hosted by FedCommunities, with the San Francisco Fed serving as host for the event in Phoenix.
Barr said he supported the Federal Open Market Committee’s decision last week to hold rates steady for a second straight meeting and suggested policymakers may need to keep rates unchanged “for some time” as they evaluate inflation, labor-market conditions and geopolitical risks. He said inflation remains “notably above” the Fed’s 2% target, with goods inflation having risen over the last year and non-housing services inflation still elevated. While he said he hopes tariff-related price effects ease later this year, Barr added he wants clearer evidence that inflation is sustainably retreating before backing further rate cuts, assuming the labor market remains stable. He also warned that conflict in the Middle East could add upside risk through higher oil and gasoline prices.
For banks and other financial institutions, Barr’s broader message was that the CRA remains a central supervisory and strategic consideration, not just a compliance exercise. He said the law was designed to ensure banks meet the credit needs of lower-income communities, but also supports a broader range of lending, investments and services tied to community stakeholders. Barr stressed that the Federal Reserve implements CRA through regulation and supervision, evaluating banks’ records of meeting community credit needs as part of the supervisory process, while noting that effective CRA partnerships can help banks attract new customers, deepen existing relationships and build expertise that supports future lending and investment.
Barr also highlighted how CRA can work in tandem with other public-policy tools that matter to banks, including the New Markets Tax Credit and Low-Income Housing Tax Credit. He said the NMTC has generated more than $8 in private investment for every federal dollar in the most recent award year cited in his remarks, while LIHTC continues to provide about $10.5 billion annually in budget authority for affordable rental housing. Barr pointed to multiple examples—including projects in Philadelphia, South Texas, Appalachia and Memphis—to argue that CRA-aligned bank capital, CDFI partnerships and tax-credit investments can expand lending capacity, support small businesses, finance housing and drive redevelopment in underserved areas.