Thursday, the Central Bank of the Russian Federation reduced its key policy rate.

The Bank of Russia lowered its refinancing rate by 50 basis points to 12.5%, effective April 24. In December, the central bank had increased interest rate by 100 basis points to 13%.

The central bank reduced its main interest rates for the first time since June 2007, when the rate was slashed to 10% from 10.5%.

Further, the central bank cut other interest rates by 50 basis points.

Meanwhile, the central bank hiked the reserve ratio to 1% as of May. Going forward, there will be monthly increases of 50 basis points each until August.

Russia's economic growth fell sharply. The gross domestic product or GDP rose 1.2% year-over-year in the fourth quarter, compared with a revised 6% growth in the previous quarter. The fourth quarter GDP growth was the smallest since 1999.

The consumer price index or CPI rose 14% year-over-year in March, compared with a 13.9% increase in the previous month.

On Wednesday, the International Monetary Fund forecast a 6% contraction in Russian GDP for this year. The lender sees 0.5% growth for next year.

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