The extraordinary rate meeting came on Tuesday after the rouble plummeted past the 100 threshold against the US dollar on Monday, dragged down by the effects of Western sanctions on Russia's balance of trade and as military spending soars.

The move is the biggest interest rate hike in Russia's history and is a sign of the central bank's growing concern about the impact of sanctions on the economy.

The bank said in a statement that the rate hike was necessary to "shape monetary conditions and overall domestic demand dynamics necessary to bring inflation back to 4% in 2024 and stabilise it close to 4% further on."

The bank also said that it would continue to monitor the situation and adjust interest rates as needed.

The rouble pared gains after the decision to stand 0.3 percent weaker at 98.00 by 08:37 GMT, but still significantly above lows near 102 on Monday which had not been hit since the early weeks after Russia's full-scale invasion of Ukraine.

The move is likely to have a significant impact on the Russian economy, making it more expensive to borrow money and slowing down economic growth.

It is also likely to lead to higher inflation, as businesses pass on the higher cost of borrowing to consumers.

The central bank's decision is a sign that it is taking the impact of sanctions seriously and is willing to take drastic measures to protect the economy.

It remains to be seen whether the rate hike will be enough to stabilize the rouble and prevent a deeper economic crisis. (ILKHA)