MOSCOW, Oct. 25 (Xinhua) -- The Russian central bank raised its key interest rate by 200 basis points from 19 to a record 21 percent, the bank said in a statement on Friday.

The bank said inflation was running above its July forecast, with the rise expected to continue.

"Additional fiscal spending and the related expansion of the federal budget deficit in 2024 have had pro-inflationary effects," it said.

It predicted annual inflation to drop to 4.5-5 percent in 2025, to 4 percent in 2026, and remain at this level further on.

It said the labor market remained tight and unemployment was still at a record low, with the labor shortage growing across many industries.

The bank has also updated its key rate forecast. "Given that from Jan. 1 to Oct. 27, 2024 the average key rate is 16.7 percent, from Oct. 28 to the end of 2024 the average key rate forecast range is 21.0-21.3 percent," it said.

At the same time, it kept its projections for GDP growth in 2024 at 3.5-4 percent.

The bank might consider raising the key interest rate further at its upcoming meeting scheduled for Dec. 20. Enditem

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