Russia's central bank cut its key interest rate by 150 basis points to 9.5% in June, bringing borrowing costs back to levels prior to its war on Ukraine.

The market expectation saw a 100 basis points decrease. "The external environment for the Russian economy remains challenging and significantly constrains economic activity," the Bank of Russia said in a statement.

"The contraction in imports due to the introduction of external trade and financial restrictions is considerably outstripping the decline in exports," it added. The bank also said inflation is slowing down faster and the decline in economic activity is of a smaller magnitude than the Bank of Russia expected in April.

The annual inflation rate in Russia fell to 17.1% in May of 2022, below market expectations of 17.3%. The Russian ruble is hovering around 58 against the dollar.