Russia's central bank cut its key interest rate by 150 basis points on Friday as the country deals with a strong currency and a possible recession.
Analysts had expected the key rate to be reduced by 50 basis points.
The bank said that the decline in business activity is slower than it had expected and that the external environment for the Russian economy is still challenging.
It is the fifth rate cut by the Central Bank of Russia this year after an emergency hike from 9.5% to 20% in February.
The rate was reduced by 150 basis points in June.
The impact of a set of one-off factors and subdued consumer demand led to a further slowdown in inflation.
The annual inflation was last estimated at 15.5% as of July 15.
The bank said its future decision-making on the key rate will be guided by inflation dynamics relative to its target and economic transformation processes.
The CBR said it will consider the necessity of a further key rate reduction in the second half of 2022.
Liam Peach, senior emerging markets economist at Capital Economics, said that the central bank did not want to slow the pace of rate cuts.
Going forward, we think there will be more gradual reductions. Russia has an average inflation-adjusted policy rate of 3% over the last two years.
According to Peach, the large moves in rates are now in the rear view and that cuts of 100bp or lower are more likely going forward.
The policy rate is expected to end this year at 7.0% and in 2023 at 5.0%, which is lower than most expect.
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