RTTNews - Thursday, Russia's central bank lowered its key interest rate by half a percent, its third reduction in six weeks, after the economy contracted sharply in the first quarter of the year.

The central bank trimmed its refinancing rate to 11.5% from 12%, effective from June 5. The bank also lowered the repurchase rate to 10.5% from 11%.

The Russian economy contracted 9.5% year-on-year in the first quarter, the worst contraction in 15 years. On a sequential basis, the contraction was much more severe, a 23.2% fall.

Recently, the International Monetary Fund lowered its outlook for Russia to show a contraction of 6.5% in 2009 from a 6% fall predicted initially.

Inflation fell to 6.8% in the year through June 1 from 7.7% recorded in the same period a year ago.

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