It’s the first time after the global economic crisis that Russia's central bank increased the refinancing rate in order to ward off surging inflation whereas the nation is grappling with economic growth issue and the major threat of destabilizing capital inflows.

Raising the refinancing rate by 0.25%, the regulator said that the other key rates would move higher as well. Following this, the central bank also raised reserve requirements for liabilities to nonresidents by 1% point to 4.5% and for other liabilities by 0.5% point to 3.5%.

Explaining this move, the central bank said that a large part of the growth in inflation came from food prices, which have increased since a drought ruined half of Russia's grain crop last summer.

"This is a very strong message from the central bank”, Nordea's Aurelija Augulyte said in a note to investors. "With such a move the central bank clearly signals its concern over inflation and determination to move toward inflation targeting”.

Experts are anticipating that this move might result into speculative capital inflows which can further result into strengthening of the ruble.

There has already been a rise in consumer prices by 3.1% in this year and the bulk of the growth has come from higher food prices, monetary inflation has also increased, with M2 money supply rising nearly 9% month-to-month in November.