Russia unexpectedly cuts interest rates to 15%

Russia's central bank reversed course Friday and slashed interest rates to 15% from 17% as the nation grapples with a weak economic outlook caused in part by sanctions from the West over its actions in Ukraine and plunging oil prices.

Late last year, the Bank of Russia dramatically raised rates 6.5% in attempt to stop a slide in its ruble currency. The ruble has shed about half of its value in recent months as oil prices have plummeted below $45 a barrel.

In a statement, the bank said it was adjusting interest rates to ward off the threat of inflation. "The decision to dramatically raise the key rate taken by the Bank of Russia on 15 December 2014 resulted in stabilization of inflation and depreciation expectations to the extent the Bank of Russia expected, " the bank said.

After the announcement, the ruble dropped 2% to about 70 rubles to the dollar.

Oil exports represent about 45% of Russian government revenue, according to the International Monetary Fund. The price decline in conjunction sanctions has further pressured an economy that was already forecast in 2015 to fall into recession.

Earlier in the week, Standard & Poor's downgraded Russia's credit rating to a non-investment grade, highlighting for investors the uncertainties associated with investing in Russia's economy. The sanctions from the United States, European Union and other partners are targeted at Russia's finance, defense and energy sectors.

NATO chief Jens Stoltenberg said this week that separatists loyal to the Kremlin operating in eastern Ukraine are continuing to receive equipment and logistical support from Moscow, an allegation Russia disputes.