Account of the monetary policy meeting of the Governing Council of the European Central Bank held on Wednesday and Thursday, 10-11 September 2025

Thank you to the Economic Club of Minnesota for the opportunity to speak to you today. I'm happy to be here for several reasons, one of which is that I have roots in Minnesota. My grandmother was born and raised in Eveleth, where her parents ran a small clothing store they opened in 1906 to serve the growing population that came here in the iron ore mining boom of that era. That generation's hard work and dreams of a better future helped build this great state as well as the prosperous economy that this club and the Federal Reserve are both dedicated to fostering. We are midway between the last meeting of the Federal Open Market Committee (FOMC) and our next meeting at the end of this month. At our last meeting in September, we decided to reduce the policy rate by 25 basis points, a decision I supported. My FOMC colleagues and I also updated our projections for the economic outlook for the next couple of years and gave our assessments of the likely appropriate policy rate path as economic conditions evolve. In my remarks today, I will share my own thinking related to those decisions last month, and how incoming data and other developments have subsequently shaped my views as we head into the FOMC's next meeting in three weeks. That includes the economic implications of various developments in Washington including the federal government shutdown, which I imagine is on the minds of many of you today. We are currently in a challenging position, because the risks to both sides of the FOMC's mandate—employment and inflation—are elevated. I agree with Chair Powell's succinct view that there is no risk-free path forward for monetary policy. While inflation has come down a great deal since 2021, it is still above our 2 percent target and is now rising. And although several data points indicate that the labor market may be roughly in balance, we also know there has been a sharp drop in job creation since May, which suggests risks to the labor market going forward. The most difficult circumstances for making monetary policy decisions are when both mandate variables are at risk. FED’S BARR: UNCERTAINTY ABOUT BOTH INFLATION AND JOBS WARRANTS A CAUTIOUS APPROACH TO ANY FURTHER INTEREST RATE CUT Fed's Barr: Fed's inflation goal faces significant risks, but also some factors that might mitigate those risks. FED OFFICIAL BARR EXPRESSES DOUBT ABOUT FULLY OVERCOMING TARIFF-DRIVEN INFLATION AND HIGHLIGHTS LONG WAIT FOR INFLATION TO RETURN TO 2% Fed's Barr: Current outlook poses challenges for judging stance of monetary policy and deciding the right path forward.

JAPAN'S TAKAICHI: DON'T SEE IMMEDIATE NEED TO REVISE GOVT-BOJ JOINT AGREEMENT VERY IMPORTANT FOR BOJ'S POLICY TO ALIGN WITH GOVT POLICY BOJ IS RESPONSIBLE FOR MONETARY POLICY MEANS BUT ANY DECISION IT MAKES MUST ALIGN WITH GOVT GOAL JAPAN'S TAKAICHI: DON'T WANT TO TRIGGER EXCESSIVE YEN DECLINE Japan's Takaichi: I have never said Japan doesn't need to be mindful of fiscal discipline Japan's Takaichi when asked about fading market bets of BoJ rate hike in October: Japan must achieve demand-led inflation but now we are still seeing cost-led inflation. - JAPAN'S TAKAICHI DECLINES COMMENT, WHEN ASKED ABOUT LIKELIHOOD OF NEAR-TERM BOJ RATE HIKE

TRUMP: TARIFFS HAVE BROUGHT PEACE TO THE WORLD “WE HAD SOME TREMENDOUS HELP… THE WHOLE WORLD CAME TOGETHER.” — PRESIDENT TRUMP TRUMP TELLS FOX NEWS: BELIEVE IRAN WILL BE PART OF THE WHOLE PEACE SITUATION SPOKE TO NETANYAHU