Why Are Deposit Rates Rising in Russia in 2026? Economists Explain the Main Reasons

2026/08/11 17:09:00

Introduction

Why can deposit rates in Russia rise even when the Bank of Russia is lowering its key rate? The main reason is that banks do not set deposit rates mechanically based on the central bank's rate. In August 2026, credit institutions are competing for customers' funds, trying to retain depositors while also taking their own liquidity needs into account. According to RIA Novosti on August 10, the average rate on three-month deposits at the 20 largest banks reached 13.76% annually as of August 5 — the highest level since March.

At the same time, the Bank of Russia's key rate has already fallen to 14%, while the regulator forecasts an average key rate of 14.5-14.6% for 2026. This shows that deposit rates, the Bank of Russia's key rate, and the investment market are interconnected but are not the same mechanism.

Why Are Deposit Rates Rising in Russia?

Deposit rates are rising primarily because banks are competing for customers' funds, responding to seasonal factors, and adjusting to expectations about the future path of the key rate. Therefore, higher rates on individual deposit products do not necessarily mean that the Bank of Russia is reversing its monetary policy.

RIA Novosti reported on August 10, citing experts, that banks are increasing the yields on short-term products amid lower summer activity among depositors, increased demand for cash, and growing interest among households in the stock market.

For banks, funds from individuals are an important source of funding. When a customer closes a deposit, transfers money to another bank, withdraws cash, or directs funds into securities, the bank loses part of its funding base. To prevent this, a bank may temporarily increase its deposit rate.

Thus, the current increase in deposit rates can be viewed as the result of competition for customers' money rather than simply a reaction to the key rate.

How Are Banks Competing for Depositors' Money?

Banks compete for customers' money primarily through interest rates, special offers, and short-term deposit products. Competition for short-term funds becomes particularly important because banks can attract money for several months without having to lock in a high funding cost for several years.

According to RIA Novosti, the average rate on three-month deposits at the 20 largest Russian banks reached 13.76% annually as of August 5, 2026. The agency noted that this was the highest level since March.

At the same time, Bank of Russia data showed that maximum deposit rates at the largest banks also remained relatively high. In July 2026, the average maximum rate at the 10 credit institutions with the largest deposit portfolios was 12.79% in the first ten-day period and 12.83% in the second.

The difference between these figures is explained by the calculation methodology. Finuslugi considers the average offers of the 20 largest banks, while the Bank of Russia's monitoring tracks maximum rates at 10 major credit institutions.

Why Are Short-Term Deposits Attractive to Banks?

Short-term deposits allow banks to attract customers' funds now without locking in a high funding cost for several years. This is particularly important when the market expects the key rate to continue declining.

If a bank offers a high interest rate for three months, it can attract funds immediately. After the deposit matures, the customer may renew it at a lower rate.

Therefore, higher short-term rates do not necessarily mean that banks expect high funding costs to persist for a long period. In some cases, they are simply a tool for managing current liquidity and the customer base.

Can Banks Face Liquidity Needs?

Yes, liquidity needs are one factor that can encourage banks to compete more aggressively for deposits. Banks need stable sources of funding to process payments, issue loans, and manage their balance sheets.

The Bank of Russia defines a liquidity deficit as a situation in which credit institutions need to attract funds from the regulator. According to Bank of Russia data, the banking sector's liquidity deficit amounted to 2.2059 trillion rubles as of July 28, 2026.

However, this figure does not mean that every bank is experiencing a shortage of funds or is in a difficult financial position. Banking-sector liquidity is an aggregate indicator, while individual credit institutions can have very different funding needs.

For a particular bank, what matters is its own balance-sheet structure, lending volume, the maturity of assets and liabilities, deposit outflows, customer account balances, and the cost of alternative funding.

That is why a bank may increase deposit rates even when the overall situation in the banking system does not require a broad increase in deposit funding costs.

Why Doesn't the Bank of Russia's Key Rate Directly Determine Deposit Rates?

The key rate is an instrument of the Bank of Russia's monetary policy, while a deposit rate is a commercial decision made by an individual bank. They are closely connected, but they are not the same.

On July 24, 2026, the Bank of Russia cut its key rate by 25 basis points to 14% annually. At the same time, the regulator raised its forecast for the average key rate in 2026 to 14.5-14.6% and set a range of 10.5-12.5% for 2027.

Changes in the key rate affect the cost of money in the economy, money-market yields, lending conditions, and banks' expectations. However, a commercial bank takes many additional factors into account before determining a deposit rate.

In particular, a bank assesses:

how much funding it needs to attract;
whether deposit funds are flowing out;
how quickly demand for loans is growing or declining;
the structure of its balance sheet;
the rates offered by competitors;
the cost of future financing;
market expectations for future changes in the key rate;
how actively customers are transferring money into other financial instruments.

Therefore, the key rate can decline while individual deposit rates increase.

Why Does Growing Interest in the Stock Market Increase Competition for Depositors?

Growing household interest in stocks and other market instruments creates additional competition for banks' customer savings. In this case, banks are not competing only with other banks but may also be competing with the capital market for customers' funds.

RIA Novosti reported on August 10 that experts linked the increase in short-term deposit rates partly to growing interest among individuals in the stock market. According to investment strategist Alexander Bakhtin, the recovery of stock-market indexes could encourage further transfers of funds from deposits into the securities market.

This point needs to be understood correctly. It does not mean that banks are directly competing with the Moscow Exchange as an individual organization. Economically, banks are competing for household capital with a broad range of financial instruments — stocks, bonds, funds, and other investment products.

If the potential returns offered by market instruments become more attractive to some investors, deposits have to compete for customers' attention and money.

Deposit or Stocks: What Should You Choose in 2026?

Deposits and stocks serve different financial purposes, so choosing between them based only on the interest rate is incorrect. A bank deposit provides predetermined conditions and generally lower market volatility, while stocks involve a higher risk of changes in the value of capital.

A bank deposit can be an appropriate instrument for money that needs to retain a relatively predictable value and generate a predetermined interest income. Stocks are suitable for investors who are willing to accept market risk in exchange for potentially higher returns.Bonds occupy an intermediate position in terms of risk and return, although their specific characteristics depend on the issuer, maturity, and market price.

Therefore, rising deposit rates do not mean that stocks or bonds automatically become less attractive. Instead, they mean that a relatively low-risk alternative is becoming more competitive for some portion of investors' capital.

Short-Term or Long-Term Deposit: Which Is More Profitable?

The choice of deposit term depends primarily on expectations for interest rates and the need to access the money.

Short-Term Deposit

A short-term deposit may be more attractive if the depositor wants to take advantage of current relatively high rates while retaining the ability to reconsider the decision in a few months.

The main advantages are:

relatively high current rates;
greater flexibility;
the ability to wait for future changes in interest rates;
the opportunity to choose another bank or product after the deposit matures.

The main disadvantage is that the same high rate may not be available when the deposit expires. If the Bank of Russia continues to lower the key rate, a similar deposit may offer a lower return when the customer renews the funds.

Long-Term Deposit

A long-term deposit allows the depositor to lock in the current yield for a longer period. This option may be more attractive if the depositor expects interest rates to continue falling.

The main advantage is the ability to lock in the current return. If rates decline in the future, an existing deposit may become more attractive because it continues to earn interest under the previously agreed terms.

However, there is also a disadvantage. If interest rates rise again in the future, the funds will remain locked in at a lower rate, and the depositor may miss better products.

Thus, a short-term deposit offers greater flexibility, while a long-term deposit provides greater certainty about the return.

Why Can Deposit Rates Rise Before Further Rate Cuts?

Deposit rates can rise temporarily even when the longer-term trend in the key rate is downward. Banks may increase yields now in order to solve a short-term funding or liquidity problem.

RIA Novosti cited an expert who said that banks are willing to pay more for short-term funds in order to retain their customer base without locking in a higher funding cost for a long period. The expert also suggested that short-term rates could decline once banks become sufficiently liquid.

At the same time, the market may revise its expectations regarding the pace of monetary easing. In July, the Bank of Russia indicated that a more gradual reduction in the key rate was necessary and raised its forecast for the average key rate in 2026 to 14.5-14.6%.

This affects deposit pricing because banks consider not only today's key rate but also the expected future cost of funding.

What Does the Rise in Deposit Rates Mean for Russians?

For depositors, rising rates create an opportunity to earn higher returns on part of their savings, but they do not guarantee that current terms will remain available for a long time.

If the money may be needed in the coming months, a short-term deposit allows the depositor to retain greater flexibility. If the funds definitely will not be needed for a long period and the depositor expects rates to continue falling, locking in the current yield for a longer period may make sense.

When comparing offers, it is important to look beyond the advertised maximum rate. Customers should check the term, interest-accrual conditions, options for adding funds or making early withdrawals, requirements for new customers, and the conditions for receiving the higher advertised rate.

It is particularly important not to confuse the maximum rate of an individual product with the average market rate. For example, the Bank of Russia's July monitoring showed an average maximum rate of 12.79-12.83% at the 10 largest banks, while the Finuslugi index recorded an average rate of 13.76% for three-month deposits at the top 20 banks as of August 5.

How to Compare Deposits With Other Investments on KuCoin?

If part of the capital is not intended as a reserve but rather for potentially higher-risk investments, investors can separately compare bank deposits with market instruments, including digital assets. Such a choice should not be evaluated solely based on nominal returns because cryptocurrency assets differ significantly from bank deposits in terms of risk, volatility, and the mechanism through which profits are generated.

KuCoin provides tools for spot trading of digital assets, while the platform's current guide explains the process from registration and security settings to account funding and spot trading. Users should independently consider applicable legal requirements and the availability of specific services in their jurisdiction.

For beginners, the comparison should be straightforward: a deposit is a capital-preservation instrument with predetermined terms, while cryptocurrency trading is a market activity involving the risk of significant price fluctuations. Therefore, investors should not move all their deposit funds into crypto assets simply because they want to achieve higher returns.

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Conclusion

The rise in deposit rates in Russia in 2026 is not a contradiction of the Bank of Russia's actions but rather a result of how banks price funding. The key rate has fallen to 14%, but commercial banks continue to determine the cost of attracting funds independently, taking into account liquidity, competition, loan demand, depositor behavior, and expectations for future monetary policy.

Another important factor is competition for household savings. Banks are trying to retain customers during a period of seasonally lower activity while also responding to growing interest among some households in the stock market. According to RIA Novosti, the average rate on three-month deposits at the 20 largest banks reached 13.76% as of August 5 — the highest level since March.

For depositors, this means that the current rise in rates may be temporary. A short-term deposit provides flexibility but carries the risk of lower returns when the deposit is renewed. A long-term deposit allows customers to lock in current terms but limits their ability to take advantage of future rate increases. Therefore, the optimal choice depends on the investment horizon, liquidity needs, and risk tolerance.

Frequently Asked Questions

1. Why Can a Deposit Rate Be Higher Than the Key Rate?

Because the key rate and the deposit rate serve different purposes. The key rate is a monetary policy instrument used by the Bank of Russia, while the deposit rate reflects the commercial cost of attracting funds for a particular bank.

2. Can a Bank Increase the Rate on an Existing Deposit?

Usually, the terms of an existing fixed-term deposit are determined by the contract and do not automatically change when market rates change. Therefore, customers should check the specific terms of the agreement before opening a deposit.

3. Why Do Banks Increase Rates Specifically on Short-Term Deposits?

Short-term deposits allow banks to attract customer funds quickly without locking in a high funding cost for a long period. This can help banks manage current liquidity and customer flows.

4. What Will Happen to Deposit Rates if the Key Rate Falls Further?

The average level of deposit rates will likely decline over time if monetary easing continues. However, individual banks may temporarily maintain or increase rates because of competition for customers and their own liquidity needs.

5. Can a Deposit Be Considered an Alternative to Cryptocurrency Investments?

Deposits and cryptocurrencies have fundamentally different risk and return characteristics. A bank deposit provides predetermined interest terms, while the value of a cryptocurrency is determined by the market and can change significantly over a short period. Therefore, these instruments should be viewed as different asset classes rather than direct equivalents.

Disclaimer : This material is provided for informational purposes only and does not constitute financial, investment, legal, or tax advice. Transactions involving cryptocurrencies and tokenized assets carry substantial risks — including price volatility, limited liquidity, counterparty exposure, and the potential for total loss of invested capital. Readers should conduct their own research and, where appropriate, consult a qualified professional before making any financial decisions.