Record High Deposit Rates in Russia
The average yield on bank deposits in Russia has surged to 18.71% per annum, marking its highest level since March 2022. According to the Central Bank's report released on October 4, this increase reflects a nearly twofold rise in interest rates over the past year, with rates climbing from about 10.19% in October 2023. Experts attribute this trend to the Central Bank's tightening monetary policy aimed at combating inflation, which currently stands at approximately 8.6%, significantly above the government's target of 4%.
As inflation pressures mount, the Central Bank has raised its key interest rate multiple times, from 7.5% to 19% over the past year. This strategy is designed to encourage savings and reduce spending, ultimately stabilizing the economy. Financial experts predict that further adjustments may occur, potentially pushing the key rate to 20% by the end of October. With many banks already offering deposit rates as high as 23%, the competition among financial institutions is intensifying, leading to an influx of funds into bank deposits, which have increased by 6 trillion rubles this year alone.
Shifts in Savings Behavior
Recent surveys indicate a significant shift in public sentiment towards bank savings, with 49% of Russians now preferring to keep their savings in bank accounts. This is a notable increase from earlier this year, reflecting growing confidence in the banking system amid rising deposit rates. The abolition of transfer fees for personal accounts has further incentivized deposits, allowing individuals to transfer larger sums without incurring additional costs.
The Central Bank emphasizes that deposits remain a safe and reliable means of protecting savings from inflation, with state insurance covering amounts up to 1.4 million rubles. As banks continue to adapt to the evolving economic landscape, the current deposit rates not only shield savings from inflation but also provide opportunities for earning additional income.
