Asked at a media round table event if Russia risked losing the World Cup, Blatter replied: "We have never said we will take the competition out of the country. That is impossible.
"Sporting boycotts are rarely a solution to any problem.
"But every country must follow the resolution taken by the FIFA Congress in Mauriutius in May and have a zero tolerance policy towards racism."
Manchester City's Ivory Coast midfielder Yaya Toure said last week that black players should consider boycotting the tournament after he was subjected to racist chants from CSKA Moscow fans during a Champions League match in Moscow.
It was the sixth racist incident in the last five years involving Russian fans.
Speaking the day after attending a gala dinner marking the 150th anniversary of the founding of the English FA, Blatter said the problem of Russian racism in soccer would be discussed at the next executive committee meeting in December.
FIFA general secretary Jerome Valcke said he would be speaking to Russian authorities about the problem during a scheduled visit to Moscow this week.
"We will go back to the executive committee and see exactly what the situation is (in Russia) and what the latest incidents have been," Blatter said.
Blatter said he was absolutely determined to stamp racism out of football but added that FIFA could not be the world's policeman.
"We cannot go to a country or a society and tell them to stop, that is not FIFA's right. But we can stop it in football and the disciplinary committees have to impose suspensions or deduct points. We are dealing with actual problems, the problems of racism today."
Valcke told reporters he would meet Alexei Sorkin, the chief executive of Russia's 2018 World Cup organising committee and said the topic of racism would be high on the agenda.
"Of course we can use sanctions, but there is also an education programme in place in Russia and the Russian authorities and the local organising committee are working together to try and solve this problem," he said.
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