Current Deposit Rates Align with Normal Trend of Falling Faster Than Loan Rates, Says Central Bank Chief Elvira Nabiullina
Russian deposit rates plummet after unusual late-2024 spike
The current situation with bank deposit rates is in line with the standard pattern where deposit rates decline more rapidly than lending rates, Central Bank Governor Elvira Nabiullina stated. She described the late-2024 scenario—when deposit rates exceeded the key rate—as "quite unusual," attributing it to banks' efforts to restore short-term liquidity requirements.
Deposit rates typically fall faster than loan rates, and the current situation fully aligns with this norm, Nabiullina said at a press conference following the Bank of Russia's board of directors meeting.
"Deposit rates are now at normal levels—they are always below the key rate, and the current situation is entirely consistent with the norm. [...] What I'd also like to highlight, given the phase of the cycle we're in, is that when rates decline and monetary policy easing is expected, deposit rates usually drop more quickly than lending rates. That's exactly what we're seeing now," the regulator's head explained.
She noted that in late 2024, deposit rates had surpassed the key rate, calling the situation unusual. "This happened because banks were then working to rebuild their short-term liquidity ratios, competing aggressively for deposits with highly attractive rates. Naturally, once liquidity conditions stabilized, deposit rates also normalized and began declining faster than the key rate," Nabiullina clarified.
Amid falling deposit rates, people have increasingly turned to other financial instruments and savings accounts, she added, while observing that household saving activity remains strong.
On April 24, the Bank of Russia's board cut the key rate by 50 basis points—from 15% to 14.5%—marking the eighth consecutive reduction. In February, the average three-month deposit rate among the 50 largest banks fell to 14.2%, according to the Finuslugi index, the lowest level since December 2023.
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