(Reuters). Russia’s central banks lowered their key interest rates to 11% on Friday at an off-schedule gathering. They also stated that they see room for additional cuts in the coming year as inflation drops from over 20-year highs, and the economy is contracting.

Following a cut to the key rate of 14% at the bank’s extraordinary meeting in April, which came weeks after the emergency rate rise to 20% caused by Russia’s deployment of tens or thousands of troops into Ukraine.

After lowering its key rate by an average of 900 basis points in February, the central bank said that it still “holds open” the possibility of reducing its rate at its next meetings.

According to a bank statement, “Inflationary pressure is decreasing due to the rouble exchange rates dynamics and the visible decline in inflation expectancies of households or businesses.”

It stated that although external conditions remain challenging for the Russian economy, there are some opportunities for financial stability, and it is possible to relax capital control.

Elvira Nabinullina, Governor of Russia will speak to a Moscow banking conference later today. She may also shed some light on the bank’s future plans.

While the 2022 inflation forecast was not mentioned by the central bank, which had previously been at 18-23% and 2023 respectively, they said inflation would fall to 5-7 percent in 2023 before it reaches its 4% goal in 2024.

The economy ministry reported that inflation slowed to 17.51% on May 20, from 17.69% one week prior. However, it hovered close to its peak since 2002. [nL2N2XH1QZ]

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

To cushion Russians against inflation, Vladimir Putin directed Wednesday’s 10% increase in the minimum wage and pensions.

He claimed that all of the country’s economic troubles were unrelated to the “special military operation” it conducted in Ukraine. This has led to severe sanctions from the West.

Juni 10 is the date for the next rate-setting session.