(Reuters) – Russia’s central bank lowered its key interest rate to 14% in a sharper-than-expected move on Friday and said it saw room for cutting rates further this year, as it tries to manage a shrinking economy and soaring inflation.

After an unexpected rate cut to 17% in April, the central bank met following an increase of 20% to cover emergency rates after Russia had sent thousands of troops to Ukraine on February 24th.

The rate reduction Friday exceeded the expectations of a move of 200 basis points in a Reuters poll earlier this week. In the wake of the West’s unprecedented sanctions, analysts predicted that Russia would require lower rates to combat a coming economic crisis.

According to a statement, “If the situation evolves in accord with the baseline forecast,” the Bank of Russia saw room for key rate cuts in 2022.

A Reuters poll on Friday revealed that the central bank would cut its key rate from 10.5% to 10.5% in the next year. This is because the firming rouble reduces inflationary risks.

The central bank stated that “exchange rate dynamics will continue to be a significant factor shaping the path for inflation and inflation expectations.”

Central bank stated that consumer inflation could accelerate to 18-23% per year by 2022. That is far higher than the 4% target which could be met in 2024. As of April 22, it was 17.6%.

The high inflation rate can affect living standards, and this has been a key concern of Russians over the years.

Now, the central bank must manage inflation to near its 20-year peak and steer the economy through the steepest contraction in the history of the Soviet Union’s fall in 1991.

The central bank released a new set of forecasts that showed Russia’s export dependent economy would shrink between 8 and 10% this year.

Elvira Nabiullina (Central Bank Governor) will give more details on forecasts, policy plans and other information at the media briefing at 1200 GMT.    Next rate-setting meetings are scheduled for June 10.