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Russia Cuts Interest Rate As Economy Slows

Russia has cut its key interest rate to 12.5 percent, from 14 percent, in a bid to boost the slowing economy.

Announcing the cut on April 30, the central bank said the decision took into account "lower inflation risks and persistent risks of considerable economic cooling."

It was the third reduction this year after the bank raised the rate by 6.5 percentage points, to 17 percent, in December to shore up the rapidly falling ruble.

A rebound in the ruble this year has paved the way for cuts aimed to spur economic activity.

Russia's economy has been hit hard by a sharp drop in oil prices for oil last year and sanctions imposed by the West over its interference in Ukraine.

Prime Minister Dmitry Medvedev said gross domestic product dropped by about 2 percent in the first quarter of 2015 -- the first quarterly contraction since 2009 -- and that damage from the sanctions is likely to increase.

The World Bank on April 1 predicted that Russia's economy would contract by 3.8 percent this year.

Based on reporting by Bloomberg, AFP, and TASS

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