Russia's central bank raised its main lending rate by 150 basis points at a board meeting on Friday, citing concerns about above-target inflation, weak oil prices and a toughening of Western sanctions.
The move brings the bank's main lending rate, the one-week minimum auction repo rate, to 9.5 percent, and brings the cumulative increase this year to 400 basis points.
The central bank has been under pressure to raise rates to defend the sliding ruble, which has shed around 20 percent against the dollar since mid-year as a result of falling oil prices and Western sanctions imposed over Russia's actions in Ukraine.
The increase was above analysts' expectations, according to a Reuters poll this week which predicted a half-point increase.
"If external conditions improve, and a persistent trend for lowering inflation and inflation expectations emerges, the Bank of Russia will be ready to start to ease its monetary policy," the central bank said in a statement.
The bank said it is concerned about inflation, which is rising as a result of the weaker ruble and a ban on most Western food imports introduced in retaliation for sanctions.
The bank said that inflation reached 8.4 percent as of October 27 and would remain above 8 percent until the end of the first quarter of 2015.
The bank also said it expected economic growth to be close to zero in the fourth quarter of this year and in the first quarter of next year.
The ruble briefly firmed after the bank's decision, trimming losses from earlier in the session, before falling back into negative territory.