In response to significant inflationary pressures, the Bank of Russia has raised its key interest rate by 200 basis points to 18%, marking the highest level in over two years. Central bank chairwoman Elvira Nabiullina cited considerable overheating in the economy as a primary concern, with inflation expectations rising sharply among the population and financial markets. The central bank has also adjusted its inflation forecast for 2024 to between 6.5-7%, well above the targeted 4%, reflecting ongoing economic strains exacerbated by wartime spending and labor shortages. Analysts predict the key rate could potentially reach 20% by the end of 2024 if inflationary trends do not improve. The central bank's decision underscores a broader commitment to combat the economic challenges presented by the ongoing conflict in Ukraine, where inflation has surged since the invasion began. Meanwhile, rising salaries and increased consumer spending contribute to the inflationary environment, leading to a complex economic scenario that the central bank is actively monitoring.