Russia's central bank today cut its main interest rate to 15% from 17% in a move that caught markets by surprise, sending the rouble tumbling.
"The Bank of Russia Board of Directors decided to reduce the key rate from 17% to 15% per annum," the central bank said in a statement.
It added the cut was "aimed at averting the sizeable decline in economic activity against the background of negative external factors."
It said the interest rate could be cut "due to the shift in the balance of risks of accelerated consumer price growth and cooling economy."
Economists had largely predicted that the central bank would decide to keep the rate the same in order to keep a lid on inflation, although the high interest rate slowed investment in the economy.
In December, the central bank had massively raised the key rate to 17% from 10.5% in a bid to stabilise the rouble. It said this had "resulted in stabilisation of inflation and depreciation expectations."
The rouble fell on the news to more than 80 against the euro and more than 71 against the dollar.
Russia's central bank today predicted that the economy would contract by an 3.2% annual rate in the first half of 2015.
