Moscow, Jul 24 (IANS): Russia's central bank announced that it has decided to raise its key interest rate from 5.5 per cent to 6.5 per cent, aimed at curbing high inflation.

The contribution of persistent factors to inflation increased due to faster growth of demand compared to output expansion capacity, the bank said in a statement released on Friday.

"Taking into account high inflation expectations, the key rate decision taken aims to constrain this risk and to return inflation to 4 per cent," it added.

The central bank said that in accordance with its estimates, the Russian economy reached its pre-pandemic level in the second quarter of 2021, reports Xinhua news agency.

"Annual inflation will reach 5.7-6.2 per cent in 2021. Given the monetary policy stance, annual inflation will edge down to 4.0-4.5 per cent in 2022 and will remain close to 4 per cent further on," the bank's forecast said.

The central bank will consider the necessity of a further key rate increase at its upcoming meetings.

Key rate decisions will take into account inflation dynamics relative to the target and economic developments and risks posed by domestic and external conditions, among other factors.