Russian banks have begun to lower deposit rates, ushering in changes that could significantly affect savers across the nation. Over recent months, deposit yields were persistently high; however, as of March 21, 2025, key financial institutions have started to cut these rates, creating a ripple effect throughout the banking sector.
The average yield on deposits for terms ranging from three months to a year has dipped below 20%, prompting experts to speculate that this shift may signal the onset of a new economic cycle. Major banks have reduced their rates, with some offering rates down by more than a percentage point recently. According to various sources, deposit rates now hover around the following levels: six-month deposits have dropped by 1.5 percentage points to 20.4%, one-year deposits have decreased almost 1.3 percentage points to about 19.25%, and short-term deposits for three months do not exceed 20.2%.
Experts attribute this trend to expected adjustments from the Central Bank of Russia. Analysts believe that the Central Bank may soon lower its key rate, currently held at 21%, as inflationary pressures, while stabilizing, still loom large over the economy. Yuriy Belikov, an expert in the field, noted, "The decline in short-term rates correlates with the likelihood of revising the key rate. Banks are cautious about offering high yields as they anticipate further changes in the financial landscape." This expectation has led banks to revise their deposit offerings, creating a sense of urgency for consumers planning to open new accounts.
As rates continue to fall, experts recommend that savers pay particular attention to long-term deposits, which still maintain relatively high rates. Experts indicate this may be an opportune moment for opening deposits before rates decline further. Banking strategies appear to be in flux, with institutions recalibrating their products to align with potential Central Bank movements aimed at nurturing economic stability.
In a recent meeting, the Central Bank maintained its key rate at 21%—a figure that has remained unchanged since its rise to this level in October 2024 following a series of gradual increases that began in July 2023. The regulator explained that while inflationary pressure has decreased, it still remains elevated, particularly within the stable sectors of the economy. Furthermore, domestic demand growth continues to outpace the production of goods and services, leading the Central Bank to adopt a cautious approach, reinforcing that high interest rates are necessary to steer inflation towards its target of 4% by 2026.
According to Bogdan Zvarich, chief analyst at Banki.ru, despite some positive trends in inflation and consumer expectations, the balance of risks remains weighted towards inflationary threats. This necessitates maintaining stricter monetary policies. "The overall scenario suggests that until inflation stabilizes further, the Central Bank will keep a close watch on both inflation trends and public expectations, which currently are showing a downward path," Zvarich stated.
As further reductions in deposit rates loom, it is projected that many major banks could soon offer rates below the 20% mark. Anton Pavlov, the chairman of Absolut Bank, forecasts that for deposits exceeding six months, rates could fall significantly. Current trends indicate that while some banks might maintain competitive rates, impending changes may lead to lower yields overall. Pavlov commented, "Clients who cannot benefit from promotional rates may find themselves receiving offers around 15-16% annually due to various surcharges. This indicates a stark contrast to the previously high yields available at the start of the year."
Moreover, as the yields on deposits stabilize below the Central Bank's key rate, savers are advised to review the evolving landscape closely. Igor Alutin, Senior Managing Director of the Moscow Exchange’s retail division and Finuslugi marketplace, confirmed that the average deposit yields in the top 20 banks have indeed fallen below the key rate, a transformative event considering previous projections.
Speculation suggests that with these declining yields, the financial market might experience a reallocation of investments. Investors may shift their focus from equities to fixed income and money market funds as deposit yields decline. "With the current conditions, this marks more than an adjustment; it is a strategic pivot, potentially drawing investors back into safer monetary options," Alutin remarked.
The implications for the broader economy are substantial, as lower yields might stimulate different forms of investments while fueling a gradual shift in consumer behavior and lending practices. While the Central Bank's hold on the key rate sends a signal of caution, it simultaneously fuels speculation about future increases or decreases that could reshape the investment landscape.
Elvira Nabiullina, Chairwoman of the Central Bank of Russia, expressed during a recent press conference that the decline in deposit rates signifies stabilization in the market environment. She noted, "The phenomenon of deposit rates exceeding the key rate is atypical. Currently, we observe a return to the traditional relationship between deposit and key rates." This statement highlights the Central Bank's efforts to normalize financial conditions following a period of volatility driven by high inflation and rapid economic shifts.
Overall, as Russian banks adapt to these changes, consumers are encouraged to remain astute to new offerings while also considering the broader economic landscape shaped by the Central Bank's policies. Future trends in deposit rates will be closely linked to the Central Bank's strategic decisions regarding inflation management and market stability, with significant implications for savers and the economy at large.
