Russian central bank slashes key interest rate to 12.5%

People walk past a board showing currency exchange rates in Moscow.
Maxim Zmeyev | Reuters
People walk past a board showing currency exchange rates in Moscow.

Russia's central bank dramatically cut interest rates by 150 basis points to 12.5 percent Thursday, and signaled that it is likely to cut rates further soon.

The Bank of Russia cited the better performance of Russia's currency, the ruble, as part of its reason for lowering rates.

The cut comes after a surprise hike in the country's key interest rate in December 2015, from 10.5 percent to 17 percent, as the central bank tried to shore up the weakening ruble and combat inflation.

Russia's central bank raises rates to 17 percent

Recently, a rally in the ruble and lower inflation expectations for the country have made Russia's economic future look slightly less bleak, however.

President Vladimir Putin and other Russian politicians have insisted that its economic crisis has peaked.

However, Russia is still expected to undergo recession this year, after plunging prices for oil - its biggest export - a ruble which is still devalued, and sanctions by Western countries following Russian activities in Ukraine helped stymie economic growth.