Mosow - Russia's central bank on Friday jacked up its interest rates by 1.5 percentage points to 9.5 percent, after Western sanctions over Ukraine sent the ruble plunging and halted growth.
The bank said growth in the last three months of 2014 and the first quarter of 2015 would be “close to zero”, as the embargo imposed by the West has had a “negative influence on economic activity”.
The new interest rate would take effect on November 5.
It follows another hike at the end of July which took the rate to 8.0 percent.
The latest rate increase comes after “prices for oil fell significantly and at the same time that certain countries toughened sanctions against a number of large Russian companies,” the bank said.
“Under these conditions, the ruble weakened, which along with the restrictions introduced in August on the import of certain foods led to further growth in consumer prices,” the bank said.
Russia had ordered restrictions on food products in retaliation against sanctions imposed by the West over its role in the Ukraine conflict.
Friday's announcement was greeted by a sharp rise in the ruble against the dollar and euro.
But the euphoria was shortlived as the currency eased quickly.
It was trading at 42.23 against the dollar and 53.14 against the euro at around 13:00 SA time.
The ruble has hit a series of record lows this year, while the central bank has intervened and spent billions of dollars in attempts to stop the ruble sliding too far too fast.
On Wednesday it sold foreign currency worth $2.928 million. - Sapa-AFP