Major Russian banks cut deposit rates after Central Bank decision

Ten of Russia’s 20 largest banks have reduced deposit rates after the Central Bank lowered its key rate by 50 basis points at its December board meeting. Data from financial marketplace Finuslugi, cited by TASS, show yields on a range of retail deposit products fell between 0.1 and 2 percentage points across the period 19 to 30 December.

Russian banks lower deposit rates

The most pronounced declines were seen in six‑month deposits, which recorded an average fall of 0.29 percentage points to 14.44 per cent. Shorter three‑month deposits dropped by 0.18 percentage points to 15.34 per cent, while one‑year deposits became the least generous, with the average rate down 0.23 percentage points to 13.27 per cent.

The Central Bank trimmed the key policy rate from 16.5 to 16.0 per cent. Officials said they were unable to move more aggressively because consumer price growth remained elevated and inflation expectations among households were still high. That caution helps explain why banks pared deposit yields rather than undertaking a broader or deeper pass-through to lending rates.

Analysts stress that the timing and scale of rate changes reflect a balancing act for the regulator. On one hand, a lower key rate can ease borrowing costs and support activity; on the other hand, persistent inflation limits the scope for rapid monetary loosening. Households who rely on deposit income have already seen nominal returns on savings decline as banks adjust offered rates.

Complicating the outlook for next year is a recent rise in value‑added tax from 20 to 22 per cent. Anatoliy Nikitin, an analyst at the Russian Union of Industrialists and Entrepreneurs, warned that the VAT increase will primarily affect non‑food sectors and is likely to push prices higher for electronics, household appliances and some services where VAT comprises a significant share of final cost.

For savers, lower deposit yields reduce the real income produced by cash holdings, particularly if inflation remains elevated. That dynamic could encourage households to redirect funds towards instruments that offer higher nominal returns or into consumption. Banks, meanwhile, may use the reduction in deposit costs to stabilise margins if lending growth resumes, though any material fall in lending rates will depend on how quickly inflation pressures abate.

Market participants will watch early 2026 closely for signs of shifting inflation trends and any further Central Bank moves. If consumer prices accelerate following the VAT change, the regulator may pause or reverse easing. Conversely, a clear slowdown in inflation would give the Central Bank room to cut rates further, which could prompt an additional round of deposit rate adjustments.

In the near term, Russian savers and companies should expect a period of adaptation as banks calibrate product yields and pricing. The December moves underline the tension facing policymakers between supporting economic activity and reining in inflationary pressures during a volatile phase of the macroeconomic cycle.