Russia's central bank on Friday opted to keep the main interest rate at 11 percent after lowering its rate five times this year, citing a serious deterioration in the economic situation.
The bank said in a statement it made the widely expected decision "due to the higher inflation risks amid persistent risks of considerable economy cooling."
The bank also gave a gloomier growth forecast for this year, predicting a contraction of between 3.9 percent and 4.4 percent in 2015.
It had previously predicted that GDP would contract by 3.2 percent. Its latest forecast is much more pessimistic than the government's estimate of 3.3 percent contraction.
The decision to keep the interest rate at the same level came after "August saw a serious deterioration in foreign economic conditions," the central bank said.
"Inflation and inflation expectations were showing a clear upward trend, impacted by the exchange rate dynamics."
The decision was expected by most economists since the central bank currently has little room for manoeuvre, wanting to lower the rate to help the economy recover but needing to protect the ruble.
In December last year, the bank hiked interest rates to 17 percent in a bid to regain control as the Russian currency plunged due to falling oil prices and Western sanctions imposed over Russia's actions in Ukraine.
Russia has subsequently cut its interest rate five times since January, most recently to 11 percent on July 31.
This level remains very difficult for businesses and households, preventing economic recovery.
As oil prices plunged this summer, the ruble fell 20 percent against the dollar, reaching its lowest level this year in August and pushing consumer prices up.
"Going forward, the economic situation will depend on the global energy prices and the economy’s ability to adjust to external shocks," the central bank said.
It said that its baseline scenario was for the price of oil to "linger at about $50 for the next three years."
These difficult conditions should help inflation to slow "considerably" in early 2016, the bank said.