Russia's central bank has not curbed price rises with high interest rates and could slow economic growth, a leading government think tank has warned.

In October, the central bank raised the key interest rate to 21 percent, the highest level in more than 20 years, explaining that it aims to curb inflation, which currently stands at 8.6 percent, and noted that citizens expect inflation high.

The interest rate hike angered many business leaders and was criticized by leading economists involved in government policy making.

"The current high level of the base interest rate and the signaled intention (of the central bank) to increase it to an even higher level have created the risk of economic decline and investment collapse in the near future," he warned. the TsMAKP institute, which advises the government.

The weight of manufacturing companies with a dangerous burden of debt service, from two-thirds of profit before interest and taxes, will double to 20 percent, economists estimate, with the risk of problems with the service of financial obligations and bankruptcy.

Current risk-free interest rates in the economy of about 18 percent mean that the initial investment pitch in five-year projects must be at least 130 percent to be economically profitable, they point out.

At the same time, tight monetary policy does not significantly affect the main 'engines' of inflation, such as rising costs of cross-border payments due to Western sanctions, higher prices of imported food and rising regulated prices of utilities , the institute emphasizes.

"Due to the movements of the central bank, the Russian economy is actually threatened with stagflation (stagnation) or even recession combined with high inflation," TsMAKP warned.

The central bank claims that stagflation and recession could be caused by an "overheated" economy whose capacity is struggling to keep up with demand, combined with labor shortages and uncontrolled wage growth.