The Central Bank of Russia (CBR) on Friday cut its interest rate to 10.5% from 11.0%. This decision was not expected by analysts.

The central bank noted that inflation was more stable.

"The Board of Directors notes the positive trends of more stable inflation, decreased inflation expectations and inflation risks against the backdrop of imminent growth recovery in the economy," the CBR said.

The central bank pointed out that it could lower its interest rate further.

"The Bank of Russia will consider the possibility of a further rate cut based on estimates for inflation risks and alignment of inflation decline with the forecast trajectory," the CBR noted.

The CBR expects inflation to be 5%-6% by the end of 2016, less than 5% in May 2017 and 4% in late 2017, while the quarterly GDP was expected to be positive in the second half of the year.

The next meeting of the CBR is scheduled to be July 29, 2016.