Russia's central bank raised interest rates to 21%, bringing borrowing costs to their highest level in more than two decades. Moscow's offensive in Ukraine has caused prices in the country to rise rapidly.
The increase takes interest rates above the emergency level introduced in February 2022 - just after Moscow moved troops into Ukraine - to their highest since 2003 as the regulator struggles to stem the economic fallout from the conflict.
But despite high inflation and Western hopes that sanctions will cripple the Russian economy, the Kremlin will increase military spending once more next year, and analysts say Moscow has enough money to continue fighting in Ukraine for the foreseeable future.
Governor Elvira Nabiullina said the pace of price increases - 8.6 percent year-on-year in September - is not slowing and that further rate hikes may be needed.
"First, inflation. Overall, we don't see any signs of it slowing down. To contain accelerating price growth, we will need much tighter monetary policy next year," she said.
Without mentioning the offensive in Ukraine, the bank directly blamed high government spending for the rise in inflation.
"Additional fiscal spending and the associated widening of the federal budget deficit in 2024 have a pro-inflationary effect," the bank said, announcing the rate hike.
The bank also said it would not be able to bring inflation back to the 4.0% target until at least 2026 | BGNES
