The share of long-term deposits with Russian banks fell to a ten-year low. Fewer people choose to keep their long-term savings in banks because of the persisting geopolitical and economic instability, according to Sergei Yelin, head of the AIP audit and consulting group.
This uncertainty has narrowed Russians’ planning horizons while numerous risks make people keep their savings in cash as a safety net in case of emergency. Their interest in long-term deposits is predictably decreasing. Some people have redirected their savings to short-term investment, while others prefer to keep their money under the mattress, the expert explained to Invest Foresight.
“Another important factor is that interest rates on deposit accounts have plummeted over the past 12 months following the key rate cuts,” Sergei Yelin added. “On the other hand, most people are clearly feeling the effects of spiraling inflation and consumer price hikes. Many actually believe that consumer prices are growing even faster than the declared inflation rate. Comparing their pace with the interest that banks offer, they doubt that their income from bank deposits would make up for the expected inflation.”