(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.

Following an unanticipated rate reduction to 17% by the central bank in April after increasing to 20% after Russia’s February 24th deployment of thousands of troops into Ukraine, the rate was met.

In a Reuters poll, Friday’s rate cuts exceeded all expectations. In the wake of the West’s unprecedented sanctions, analysts predicted that Russia would require lower rates to combat a coming economic crisis.

The central bank stated in a statement that if the current situation is in accordance with its baseline forecast, then the Bank of Russia will consider key rate reductions for 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%.

Inflation is a major concern for Russians.

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.

According to the new forecasts of Russia’s central bank, Russia’s export-dependent economy is expected to shrink by 8-10% in 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.    Juni 10 is the next scheduled rate-setting meeting.