MOSCOW (AP) — Russia’s central bank on Friday raised its key interest rate by two percentage points to a record 21 percent, aiming to combat rising inflation as the country’s military spending government are straining the economy’s ability to produce goods and services. increase workers’ wages.

The central bank said in a statement that “the growth in domestic demand still far exceeds the capacity to expand the supply of goods and services.” Inflation, the statement said, “is significantly higher than the Bank of Russia’s July forecast” and “inflation expectations continue to rise.” It raises the prospect of further rate increases in December.

The Russian economy continues to show growth thanks to continued oil export revenues and public spending on goods, particularly military goods. One result is inflation, which the central bank has tried to combat with higher rates that make it more expensive to borrow and spend on goods, in theory easing pressure on prices.