Russia's central bank cut Friday its main interest rate to 15 percent from 17 percent in a move that caught markets by surprise, sending the ruble tumbling.
"The Bank of Russia Board of Directors decided to reduce the key rate from 17.00 to 15.00 percent 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.
The central bank on December 15 2014 had massively raised the key rate to 17 percent from 10.5 percent in a bid to stabilise the ruble.
The central bank said this had "resulted in stabilisation of inflation and depreciation expectations."
The ruble fell on the news to more than 80 against the euro and more than 71 against the dollar, levels not reached since December 17, a day after "Black Tuesday" when the ruble suffered its worst plunge since President Vladimir Putin came to power 15 years ago.
The central bank on Friday predicted that the economy would contract by an 3.2 percent annual rate in the first half of 2015.