A food market in Spain. (Photo: Bloomberg)

Speaking to the European Parliament Committee on Economic and Monetary Affairs, Ms. Lagarde said the ECB has increased its rate on bank deposits by a record 200 basis points to 1.5% since July.

She added that the ECB expects "to raise rates further to the levels needed to ensure that inflation returns to the 2% medium-term target in a timely manner".

The ECB is expected to announce an increased interest rate on bank deposits and make a new forecast of inflation and economic growth at its next meeting in December.