Russian central bank raises key rate to 16pc

MOSCOW, Dec 15 (AFP): Russia's central bank on Friday raised its key interest rate to 16 per cent, announcing a fifth hike since summer in a bid to fight accelerating inflation.

The central bank has been grappling with the economic fallout of the offensive in Ukraine that includes Western sanctions, a surge in government military spending and the call-up of hundreds of thousands of men.

"Current inflationary pressures remain high. Annual inflation for 2023 is expected to be close to the upper bound of the 7.0-7.5 per cent forecast range," the Bank of Russia said in a statement explaining its decision.

Higher interest rates are designed to sap demand by making it more expensive to borrow money and encouraging consumers and businesses to save, not spend.