The Central Bank of Russia decided Friday to raise its key rate by half a percentage point to 8 percent, and indicated further raise should inflation risks persist.
"Inflation deceleration in July 2014 has been slower than expected. At the same time, inflation risks have increased due to a combination of factors," the bank said in a statement.
Among the factors, the bank named geopolitical tension and its potential impact on the ruble exchange rate dynamics, referring to the ongoing crisis in Ukraine.
Potential changes in tax and tariff policy also contribute to the rise of the consumer price index, it said.
"The adopted decision is aimed at slowing the consumer price growth to the 4 percent target level in the medium term," Interfax news agency quoted the bank as saying.
It added that Russia will continue raising the key rate if high inflation risks persist.
This is the third time the bank raised the key rate since March, when it raised the rate from 5.5 percent to 7 percent, then to 7.5 percent in April. Russia's ruble has lost 13 percent of value against the U.S. dollar since January.
As the United States and its allies pounded waves of sanctions against Moscow over the Ukraine crisis, Russia has been working on numerous schemes to maintain economic vitality.