MOSCOW--The Bank of Russia said Wednesday it had suspended daily purchases of U.S. dollars for its reserves since Tuesday as the ruble dropped to five-month lows, threatening to spur already stubbornly high inflation.

The fresh ruble weakness, mostly driven by a slump in global oil prices, seems set to scuttle hopes for big cuts to the central bank's lending rates this year to revive the country's shrinking economy. The bank has warned that inflationary risks could limit the scope for monetary easing.

The central bank said it stopped buying foreign currency on the domestic market on July 28, the day the ruble weakened beyond the psychologically important levels of 60 against the dollar and 67 against the euro for the first time since March.

The decision "indicates that the central bank is looking to strike the right balance (between) the desire to continue cutting rates and the need to keep inflation under control," said Ivan Tchakarov, chief economist at Citi in Moscow.

The ruble strengthened in response to news of the move, trading at 59.5 midafternoon in Moscow.

After allowing the ruble to float in late 2014, the central bank has carried out daily interventions of up to $200 million a day in the currency market to bring its gold and foreign-exchange reserves back to around $500 billion in the next three to five years. As of July 17, the reserves stood at $358.2 billion.

The central bank said in an emailed comment that the suspension of interventions was caused by elevated volatility in the currency market and was in line with its earlier pledges to minimize impact of buying foreign currency for reserves on the ruble exchange rate.

Still, analysts at Sberbank CIB said the decision to halt foreign currency purchases "risks confusing the market as to whether the central bank has indicated USD/RUB 60.0 as the upper band of its comfort zone." Bank of Russia came under fire late last year after the ruble slipped wildly, briefly hitting 80 to the dollar and sending panicked residents scurrying to exchange booths and ATMs.

Inflation has been a weak spot for the central bank as the annual pace of price growth has remained above 15% for several months, far from the 4% target. At the same time, Western sanctions and oil prices that have halved since a year ago have both sent the commodity-dependent economy into recession for the first time since 2009. Government data this week showed that the economy was 4.2% smaller in June compared with last year, still better than the 4.8% reading for May, suggesting the economic decline could be bottoming out.

This week the Bank of Russia is in the market spotlight as it will have to balance inflation and growth risks at its rate-setting meeting on July 31.

The majority of analysts predict that the central bank will cut rates on Friday, though on a lesser scale than earlier this year. So far in 2015, the central bank has slashed the key rate four times, from 17% to 11.5%. This time, the central bank is widely seen cutting the key rate by 50 basis points to 11%.

The suspension of interventions indicates that the central bank "remains vigilant with respect to how the weaker currency may translate into higher inflationary expectations," Mr. Tchakarov said. "It makes it even more likely that the central bank would feel more comfortable cutting rates on Friday."

The recent bout of weakness in the ruble, however, has raised concerns that another rate cut would put extra pressure on the battered currency and will only spur inflation further. Renaissance Capital, which expects a rate cut this week, said the risks to its interest-rate call are now skewed toward no change. Barclays also said in a note to clients that the central bank is likely to pause in July and will keep rates unchanged.

Write to Andrey Ostroukh at andrey.ostroukh@wsj.com