Berlin (dpa) - The Central Bank of Russia reduced its key interest rate from 17 per cent to 15 per cent on Friday, after a massive hike in December, triggering a fresh fall of the rouble against the dollar and the euro. The bank explained its surprise decision by saying that the risk of inflation had gone down while the risk of economic slowdown had risen. On December 16, the central bank massively raised its interest rate from 10.5 to 17 per cent to stem a rapid rouble devaluation. However, the Russian currency collapsed to new depths and lost 20 per cent of its value in a single day. Friday‘s interest rate cut put fresh pressure on the rouble. The Russian currency traded at more than 70 to the dollar and 81 to the euro in early afternoon trading, the lowest value since December‘s plunge. The central bank said that December‘s interest hike had stabilized inflationary and devaluation expectations. "The surge in inflation was caused by the rouble‘s weakening and will be of limited duration," it said. Inflation reached 11.4 per cent in Russia last year, the highest level since 2008 and analysts warn that prices will continue to rise in coming months as the weak rouble makes imports more expensive. Russia‘s economy grew by only 0.6 per cent last year and economists predict a recession of up to 4 per cent for this year.

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