MOSCOW - Russia's Central Bank announced Monday it has decided to increase its key interest rate to 20 percent.

"The Bank of Russia Board of Directors decided to increase the key rate to 20 percent per annum from Feb 28," it said in a statement.

"External conditions for the Russian economy have drastically changed," it said, adding that the increase of the key rate will ensure a rise in deposit rates to levels needed to compensate for the increased depreciation and inflation risks, and this is needed to support financial and price stability and protect the savings of citizens from depreciation.

Further key rate decisions will be made taking into account risks posed by external and domestic conditions and the reaction of financial markets, as well as actual and expected inflation movements relative to the target and economic developments over the forecast period, according to the statement.