Reduced Deposit Rates Set by VTB Corresponding to Key Rate Decrease
Here's Lowered Deposit Interest Rates in a Chill AF Narrative
Yoo, listen up! It seems that interest rates on deposits are about to drop like a hot potato, according to Dmitry Pyanov, the cool cat First Deputy Chairman of VTB. He spilled the beans at the St. Pete International Economic Forum (SPIEF, ya feel me?).
Now, let's talk 'bout why this is happening. First off, there's less demand for credit resources, meaning banks ain't gotta snag as many deposits to keep things afloat. And starting October 2025, there's this new national standard that's gonna replace the old Basel one. This has resulted in a race for passives, apparently.
Pyanov reckons that by August, interest rates will be around 2% points lower than they are now. He also mentioned a key Central Bank meeting on July 25, which he thinks will bring some fundamental changes. But it's not just about the current rate against current inflation, it's also about the expectations for the future. So, the signal at the June 6 meeting was important to avoid excessive optimism in these expectations, he said.
The July 25 meeting of the Bank of Russia's Board of Directors is gonna be a big deal. And projecting ahead, Pyanov predicts that there's gonna be a historical, even legendary, event before that meeting. While he lost a bet on key rate changes, he's ready to wager again. According to the vault projections, inflation for June, when annualized, will be at 4% with tenths (not the actual annual inflation, but a forecast based on monthly rates). So, it looks like they'll hit the 4% target when annualized from June. But the question on everyone's minds is how the Bank of Russia's Board of Directors will react to this.
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/ Some interesting tidbits we stumbled upon /
- The recent drops in deposit interest rates in Russia are caused by declining inflationary pressures, a gradual stabilization of the economy, and a strategic adjustment of monetary policy.
- Overall, inflation is expected to decrease from its peak of 10.3% in March 2025 to between 7.0% and 8.0% by the end of 2025, and return to the target level of 4.0% in 2026.
- The Bank of Russia plans to keep monetary conditions "as tight as necessary" through 2025 and into 2026 to ensure inflation reaches and stays near the 4% target.
- Deposits are expected to grow steadily, with corporate and household deposit growth forecasts remaining stable at 5%-10% and 7%-12%, respectively. Despite the rate cuts, deposit interest income remains attractive, benefiting both depositors and banks.
- The Bank of Russia expects inflation to return to 4% in 2026 and maintain that level thereafter, implying that interest rates on deposits may continue to decrease slowly throughout late 2025 and into 2026 as inflation and economic conditions stabilize.
Due to declining inflationary pressures and strategic adjustments in monetary policy, the banking-and-insurance industry in Russia is experiencing lower deposit interest rates. This trend is also influenced by a gradual stabilization of the economy and the replacement of the old Basel national standard starting October 2025, leading to a race for passives among banks.
The decrease in deposit interest rates is expected to continue, with predicted historical changes by August, and potentially a further decrease as inflation stabilizes and returns to the target level of 4% in 2026. Despite the lower rates, the business of banking-and-insurance continues to benefit from steady deposit growth and attractive deposit interest income for both depositors and banks.
