Russia’s central bank raises interest rate to 21% to fight inflation boosted by military spending

MOSCOW (AP) — Russia’s central bank has raised its key interest rate by two percentage points to a record-high 21% in an effort to combat growing inflation. Government spending on the military is straining the economy’s capacity to produce goods and services and driving up workers’ wages. The central bank said in a statement Friday that “growth in domestic demand is still significantly outstripping the capabilities to expand the supply of goods and services.” Inflation, the statement said, is running considerably above the Bank of Russia’s July forecast, and “inflation expectations continue to increase.” It held out the prospect of more rate increases in December.