By Paul Hannon

Russia's central bank on Friday raised its key interest rate in response to a stronger-than-expected pickup in inflation as the economy recovers from the effects of the Covid-19 pandemic.

In a statement, the Bank of Russia said it had lifted its key rate to 7.5% from 6.75%, having begun to tighten its policy in March, when its key rate stood at 4.25%.

The central bank said further rate rises may not be needed to bring inflation down to its 4% target. Russia's inflation rate was 7.4% in September.

"The contribution of persistent factors to inflation remains considerable on the back of faster growth in demand relative to output expansion capacity," the central bank said. "In this environment, given that inflation expectations are up again, the balance of risks for inflation is markedly tilted to the upside."

Write to Paul Hannon at paul.hannon@wsj.com

(END) Dow Jones Newswires

October 22, 2021 07:20 ET (11:20 GMT)