Russia's central bank lowered its key interest rate unexpectedly for the first time in almost a year, citing steady inflation.
The Board of Directors decided on Friday to cut its benchmark rate to 10.50 percent from 11.00 percent after holding it steady for six straight meetings.
The bank was widely expected to leave its key rate unchanged. The bank last cut its key rate in July 2015.
In a statement, the bank said it "notes the positive trends of more stable inflation, decreased inflation expectations and inflation risks against the backdrop of imminent growth recovery in the economy."
"The Bank of Russia will consider the possibility of a further rate cut based on estimates for inflation risks and alignment of inflation decline with the forecast trajectory," the bank said.
The bank lowered the inflation forecast for the end of 2016 to 5-6 percent. Inflation was forecast to reach the target of 4 percent at the end of next year.
Headline inflation remained at 7.3 percent for the third straight month in May.
The International Monetary Fund forecast the economy to contract 1.8 percent this year before expanding 0.8 percent next year.
However, the central bank forecast the economy to expand 1.3 percent in 2017.
The bank is scheduled to conduct the next board meeting on July 29.
by RTT Staff Writer
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