European Central Bank (ECB) President Christine Lagarde spoke at the Monetary Dialogue session of the European Parliament (EP) Economic and Financial Affairs Committee in Brussels.

Reminding that the ECB decided to increase interest rates by 25 basis points at its last meeting, Lagarde stated that the inflation target can be achieved if interest rates are maintained at current levels for a long enough period of time.

Lagarde reminded that economic activity in the Eurozone stagnated in the first half of this year, the decline in exports and tight financing conditions slowed growth, and expressed that she expects the increase in consumer spending and real incomes to boost economic growth with the support of falling inflation, rising wages and a strong labor market.

Emphasizing that inflationary pressures are expected to decrease and inflation is expected to reach the target by the end of 2025, Lagarde said that inflation in the Eurozone is estimated at 5.6 percent in 2023, 3.2 percent in 2024 and 2.1 percent in 2025.

Lagarde said, "We are determined to ensure that inflation returns to our medium-term target of 2 percent. Inflation continues to decline but is still expected to remain high for a very long time."

Pointing out that the ECB will keep interest rates at current levels as long as necessary, Lagarde explained that the interest rate decision will be based on incoming economic and financial data, data on the basic dynamics and outlook of inflation.

Lagarde stated that in order not to increase medium-term inflationary pressures, governments in Europe should withdraw the support measures given as the energy crisis eases, make fiscal policies more efficient and take steps to reduce high public debt.

On September 14, the ECB decided to raise the three main policy rates by 25 basis points, raising the refinancing rate to 4.50 percent, the deposit rate to 4 percent and the marginal funding rate to 4.75 percent.

With this increase, the ECB's deposit and refinancing rates reached their highest levels since 1999 and the marginal funding rate since 2001.

Markets had expected that the ECB's interest rate hike cycle might be over after this.