MOSCOW: Russia's central bank increased its key interest rate to 6.75% on Friday, its fifth hike this year to try to tame stubbornly high inflation, and indicated that more rate hikes were possible.

A majority of analysts polled by Reuters beforehand predicted the central bank would raise the key rate , which stood at 6.5% before the decision, by a bigger 50 basis points after raising rates by 100 basis points in July.

The central bank said its decision had been motivated by higher inflation.

"If the situation develops in line with the baseline forecast, the Bank of Russia holds open the prospect of further key rate rises at its upcoming meetings," it said in a statement.

"The balance of risks remains significantly shifted towards proinflationary ones."

The central bank said inflation was at 6.74% as of Sept. 6 and on track to return to 4.0-4.5% in 2022. The central bank, which targets inflation at 4%, dropped the year-end inflation forecast which earlier stood at 5.7-6.2%.

Rouble hovers near 73 vs dollar; focus on Friday's rate decision

High inflation dents living standards and has been one of the key concerns among households ahead of parliamentary elections later this month where the ruling party United Russia is widely expected to retain its dominance.

Higher rates help tame consumer inflation by pushing up lending costs and increasing the appeal of bank deposits.

Higher rates are also supportive of the rouble, while expectations that the rate-hiking cycle is close to conclusion and will reverse at some point could spur inflows of foreign funds into Russian treasury bonds.

The rouble weakened to 72.91 against the dollar after the rate move from 72.76 seen shortly before.

Elvira Nabiullina, governor of the central bank, will shed more light on the central bank's forecasts and monetary policy plans at an online news conference at 1200 GMT.

The next rate-setting meeting is scheduled for Oct. 22.