the Bank of Russia has published data on average maximum interest rate on deposits in top 10 banks by volume of deposits of physical persons. At the end of the first decade of may it amounted to 5.51%, the highest result since the end of January. In the third week of April, the figure was of 5.36%.
the rate hike by banks is at odds with the actions of the Bank of Russia, which at the end of April lowered its key rate by 0.5 percentage points to the current 5.5% per annum. It is not a single action, and a noticeable easing of monetary policy. The head of the Central Bank Elvira Nabiullina admitted that following the reduction of the key rate could take place in June. Moreover, the Bank of Russia will consider the possibility of its decrease from one percentage point to 4.5% per annum.
Key rate – a key indicator for the dynamics of the cost of deposits. Usually, banks reduced Deposit rates almost immediately after the Central Bank lowered the key rate. But in conditions when the inflow of deposits slowed down obviously, and the part of investors in terms of lockdown and the loss of a steady income begins to spend previously accumulated money, the banks seek to retain the loyalty of its customers, says senior managing Director of rating Agency NKR Alexander Proklov. In fact, the only way this is a rate increase, however, the aggressive growth rates nevertheless in the Deposit market is not visible, he said.
Nervousness in the actions of investors contribute the depreciation of the ruble and negative economic news, adds associate Director on Bank ratings “Expert RA” Vyacheslav Putilovsky. In addition, the pandemic has reduced the income of people who are forced to withdraw their savings from banks and spend on daily consumer needs, says the analyst.
most Likely, after the period of self-isolation and the gradual recovery of incomes, banks will return to a more conservative policy in terms of interest rates, predicts Proklov. In case of continuation by the Bank of Russia relatively loose monetary policy the average rate on deposits at year-end, according to him, can be in the region of 4%. Given the forecasts of the Bank of Russia on the possibility of further reduction in the key rate, the rate on Bank deposits will have similar downward trend, even with the local promotions, agrees Putilov.
