By Jonathan Davies

Russia's central bank has raised its main interest rate to 10.5%, weeks after raising it from 8% to 9.5%.

The raise comes as the latest attempts to tackle inflation and confirms plenty of speculation.

The Bank of Russia this week said that annual inflation was 9.4% - driven by the weak rouble and a ban on food imports from the West.

The increase in interest rates comes days after the central bank confirmed it had spent $70bn so far this year on trying to boost the rouble.

Andy Scott from foreign currency specialists, HiFX, said: “Russia’s economy looks in bad shape going into 2015 with the central bank predicting lower growth, whilst saying it would continue to raise interest rate if inflation risks strengthened — a toxic combination. Vladimir Putin might have stoked a nationalist spirit amongst Russians following the annexation of Crimea that has seen his approval ratings at an all-time high, but as inflation spirals upwards and if unemployment starts to rise, I suspect that the blame might be aimed at the West, but the anger directed at Mr Putin. A storm is definitely in the making, with the fall in the rouble just the beginning.”

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