Russia’s Central Bank on Friday raised its key rate by 100 basis points to 9.5% to cushion surging inflation, bringing borrowing costs to their highest level in five years.

“Inflation is developing appreciably above the Bank’s October forecast,” the bank said in a statement.

It also said that inflation expectations have not declined yet and hit multi-year highs, adding the monetary policy stance is aimed to return inflation to 4%.

Annual inflation in January climbed to 8.7% (vs 8.4% in December 2021), which is projected at 8.8% as of 4 Feb.

Expanding demand, global commodity prices and the rapid recovery of economic activity exacerbates inflationary pressure, the bank said.

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