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Russia is facing the mounting risk of stagflation, a think tank tied to the Kremlin has said.

TsMAKP said the nation's high interest rates would trigger an economic downturn while inflation remains high.

Russia's tight monetary policy is costing businesses profitability and risks spurring bankruptcies.

Moscow's failed attempt to stamp out inflation is driving the country toward its worst-case economic scenario, a Russian think tank tied to the government has said.

On Wednesday, TsMAKP condemned Russia's tight monetary policy, warning that high interest rates would trigger an economic downturn. With inflation still running hot, that could create a nightmare outcome for Kremlin officials: stagflation.

"As a result of the central bank's actions, the Russian economy is effectively facing the threat of stagflation — simultaneous stagnation or even recession and high inflation," the government-advising think tank said[..]