30.04.201508:32:00UTC+00Russia Cuts Key Interest Rate By 150 Bps

Russia's central bank lowered its key interest rate by a more-than-expected 150 basis point on Thursday citing lower inflation risks and weak economic activity.

The Board of Directors of Bank of Russia cut the key rate by 150 basis points to 12.5 percent from 14 percent. Economists had forecast a 100 basis point reduction.

This was the third rate cut this year. It had lowered the rate by 100 basis points in March and 200 basis points in January.

The bank said it is ready to continue lowering rates if inflation risks weaken. Inflation is forecast to slow to below 8 percent in a year and to the target of 4 percent in 2017.

Today's rate cut suggests that policymakers will take advantage of the ruble's recent strength to unwind the policy tightening that was put in place in the heat of the currency crisis towards the end of last year, Neil Shearing, chief emerging markets economist at Capital Economics said. The economist expects the benchmark rate to end this year at 9 percent.