Russia’s central bank has lowered its rate to 7.5% this year after sending troops to Ukraine and imposing sanctions.

The bank raised its year-end inflation projection to 6.0-7.0%, citing inflationary risks from a tight labor market, strong consumer demand, and Moscow’s budget deficit.

Capital Economics doubts inflation will reach the bank’s 4% target in 2024 and predicts more rate hikes.

The bank expects a $45 billion current account surplus this year.