Russia's central bank holds off on interest rate hike amid friction between inflation, war spending

Russia's central bank has left its benchmark interest rate at a record 21%, holding off on further increases despite high consumer inflation fueled by the Kremlin's war against Ukraine.

The decision Friday comes amid criticism from influential business figures, including tycoons close to the Kremlin, that high rates are putting the brakes on business activity and the economy.

And it underlines the ongoing friction in the economy between military spending and stable prices for consumers.

Central Bank of Russia Gov. Elvira Nabiullina said that lending to companies had tightened more than expected due to the October rate hike that brought the benchmark to its current record level. The central bank held open the possibility of an increase at its next meeting and said inflation was expected to fall to an annual 4% next year from its current 9.5%.