Russian banks have lowered the interest they offer on everyday household deposits in recent weeks. Analysts point to two main forces behind this shift. The first is policy related: the central bank did not change its key rate before the year turned, and the market did not see the anticipated rise in the cost of money. As a result, banks held back from lifting deposit yields in response to what they expected would be higher funding costs. The second driver concerns the bond market tied to policy moves. With the key rate left unchanged, demand for government bonds pressed their prices lower for both short and long issues. When bond prices fall, a bank’s funding costs rise relative to the income it earns on deposits, squeezing margins. The combined effect helps explain why many lenders trimmed the returns offered to savers. Observers such as Alexey Vedev, a former deputy minister of economy and a doctor of economic sciences, have linked these dynamics to the pricing of retail deposits in Russia, highlighting how policy and bond markets interact to shape consumer rates.
The first force, policy guidance, centers on the central bank holding the key rate before the new year. Banks did not see their funding costs rise as some anticipated, so there was little incentive to push deposit yields higher. In this environment, lenders prioritized maintaining liquidity and stability over chasing higher profits, which kept the incentive to attract new funds modest. For savers, this means deposits offer comparatively modest gains even as market conditions remain uncertain. The pace of rate adjustments by individual banks often mirrors the broader funding landscape and the outlook for future policy, rather than reacting to isolated shifts in one week or one month.
The second factor involves the bond market’s reaction to a steady policy stance. When the key rate stays flat, the price of federal loan bonds tends to move downward as investors reassess risk and return expectations. This depreciation translates into higher effective funding costs for banks, which must balance liabilities that carry greater expense against the interest earned on deposits. With those pressures in play, banks limit the attractiveness of deposit products to protect profit margins. In this context, the decline in bond prices acts as a drag on the income banks can realize from lending and savings products alike, guiding the path of deposit yields lower still across the market.
In January, Svetlana Frumina, head of the Department of Global Financial Markets and Fintech at the Russian University of Economics GV Plekhanova, observed that inflation continued to rise. She noted that despite the uptrend, the central bank might choose to hold or even reduce the key rate when its board meets in February. Earlier remarks from central bank officials suggested that January often marks the peak of annual inflation. These signals create a shifting outlook for savers, as banks align deposit pricing with evolving expectations about policy and inflation. Taken together, the January data and February policy outlook underscore why deposit rates in Russia remain sensitive to policy signals, bond market dynamics, and the broader macroeconomic backdrop, a reality that resonates with savers in other economies who closely monitor central bank moves and bond yields to gauge the true value of their savings.