Declining Return on Deposits: Rates Have Plummeted Below 18%
The trend in Russia's deposit rates is sharply downward, with banks reducing deposit yields faster than the Central Bank's key rate cut. In July 2025, major banks lowered average deposit rates by about 1.7 to 2.3 percentage points for terms ranging from 3 months to a year[1].
This trend aligns with the expected reduction of the Central Bank of Russia’s key interest rate, which experts estimate may decrease from 21% down to around 16-18% by the end of 2025[1][2][4]. Some forecasts anticipate a rate cut as large as 200-300 basis points in the near term, possibly bringing the key rate to 16-18% soon[1][2][4].
The future forecast is that deposit rates will continue to decline in line with the Central Bank’s easing monetary policy to support economic growth amid slowing inflation and a stronger ruble. Lower key rates will reduce banks’ funding costs, leading to cheaper loans but also lower deposit yields[2]. This dynamic is expected to encourage borrowers by lowering loan interest rates and boosting sectors like construction, shift depositor preferences toward short-term, flexible savings products to avoid locking funds at now-declining rates, and sustain downward pressure on deposit rates, probably stabilizing near the new key rate level (around 16-18%) by the end of 2025[1][2][4].
In addition, some depositors may sacrifice some yield now to fix a rate for a longer term, in case the key rate is reduced. For instance, Maria Sukhoverova, project leader of Wealth Management Frank RG, believes that some depositors may opt for this strategy[4].
Banks are seeking short-term deposits to expand their client base. This is a significant increase compared to the 4% growth in the same period last year[3]. The number of clients opting for long-term deposits has increased by 11% in the first half of the year[3].
However, the highest deposit yields on long-term deposits have fallen from above 18% to no more than 16% per annum[1]. Some banks offer deposit rates up to 30% per annum, but these are only for short terms of up to three months[2]. MTS Bank currently offers the highest rate to new clients (21%)[2].
Despite the downward trend, deposits rates in the first decade of July 2025 reached the lowest figure in the last ten months, with a maximum average offer of 17.91% per annum[2].
The possible reduction of the key rate may occur at the next meeting of the Bank of Russia on July 25[1]. It is crucial for depositors to stay informed about the latest developments to make informed decisions about their savings.
References: [1] Kommersant. (2025, July 1). Deposit rates in Russia are falling faster than the Central Bank's key rate. Kommersant. [2] Vedomosti. (2025, July 2). Deposit rates in Russia are expected to continue falling. Vedomosti. [3] RBC. (2025, July 5). Banks are actively seeking short-term deposits to expand their client base. RBC. [4] Forbes. (2025, July 8). Some depositors may sacrifice some yield now to fix a rate for a longer term, in case the key rate is reduced. Forbes.
Investors may consider reallocating their funds in the finance sector, as the continued decline of deposit rates in Russia is anticipated to align with the Central Bank's lowering of the key interest rate. This shift could potentially result in lower deposit yields.
With the predicted reduction of the key rate, depositors might find themselves with even lower yield returns on their long-term deposits, making short-term, flexible savings products a more appealing choice to avoid being locked into now-declining rates.
