Moscow, July 26 (IANS): Russia's central bank has raised its key interest rate by 200 basis points from 16 to 18 per cent, it said in a statement Friday.

Inflation continues to rise and currently surpasses the bank's April forecast, the bank said, adding that domestic demand continues to grow faster than the capacity to expand supply.

The central bank has revised its inflation forecast for 2024, raising it to 6.5-7.0 per cent. It said that annual inflation would decline to 4.0-4.5 percent in 2025 and stay close to 4 percent further on, Xinhua news agency reported.

Data for the second quarter of 2024 indicate that the Russian economy continued to grow rapidly. However, labor shortages were on the rise, and the growth in domestic demand did not lead to a proportional increase in the supply of goods and services but rather intensified inflationary pressures, according to the statement.

"Given that from January 1 to July 28, 2024, the average key rate is 16 per cent, from July 29 to the end of 2024, the average key rate is projected to be in the range from 18.0-19.4 per cent," the bank said.

The bank will review the possibility of raising the key interest rate further at its upcoming meeting, scheduled for September 13.