Russia’s central bank on Friday raised its key interest rate by two percentage points to a record-high 21% in an effort to stem growing inflation as massive government spending on the military amid the fighting in Ukraine strains the economy’s capacity to produce goods and services and drives up workers’ wages.

The Bank of Russia lifted borrowing costs to the highest level since the invasion of Ukraine as it struggles to cool an overheating economy.

The Bank of Russia hiked its key rate to a record high, surpassing the level it imposed after President Vladimir Putin ordered the invasion of Ukraine, as policymakers grapple with persistent price growth.