NEYVA Bank: Russian Banks Might Raise Interest Rates on Loans, Savings Deposits
24 March 2020 (09:23)
UrBC, Yekaterinburg, March 24, 2020. Banking experts believe the interest rate charged on loans/offered on savings deposits might go up in the near future because of the growing lending and inflation risks.
The Bank of Russia decided to keep the key rate at 6% p.a. at the end of last week (March 20). The CBR commented that the current weakening of the ruble was seen as a temporary pro-inflation factor brought about by plummeting oil prices, COVID-19 pandemic, and increased global economic uncertainty in the medium term.
Now prior to the CBR’s March meeting, there was plenty of speculation within the banking community and among banking analysts as to what decision the CBR’s Board of Directors would take in the end.
‘The key rate remained at its current percentage, which only makes sense: the Central Bank needs a clearer economic picture to make the decision to bring the key rate up or down, and this picture is currently missing. Plummeting oil prices, a weak ruble, the coronavirus pandemic are all key factors affecting both the national and the global economy; it’s hard to say what will happen as soon as tomorrow or in two days. We do believe, however, that reducing the key rate would have been a more balanced move in terms of supporting the economy and giving the national currency a free rein so as to not use up the reserves,’ says Vice Chair of the Board at NEYVA Bank Igor Koshmin.
As for the immediate effects on the banking services, the interest rate charged on loans/offered on savings deposits ‘might go up because of the growing lending and inflation risks.’
The Bank of Russia decided to keep the key rate at 6% p.a. at the end of last week (March 20). The CBR commented that the current weakening of the ruble was seen as a temporary pro-inflation factor brought about by plummeting oil prices, COVID-19 pandemic, and increased global economic uncertainty in the medium term.
Now prior to the CBR’s March meeting, there was plenty of speculation within the banking community and among banking analysts as to what decision the CBR’s Board of Directors would take in the end.
‘The key rate remained at its current percentage, which only makes sense: the Central Bank needs a clearer economic picture to make the decision to bring the key rate up or down, and this picture is currently missing. Plummeting oil prices, a weak ruble, the coronavirus pandemic are all key factors affecting both the national and the global economy; it’s hard to say what will happen as soon as tomorrow or in two days. We do believe, however, that reducing the key rate would have been a more balanced move in terms of supporting the economy and giving the national currency a free rein so as to not use up the reserves,’ says Vice Chair of the Board at NEYVA Bank Igor Koshmin.
As for the immediate effects on the banking services, the interest rate charged on loans/offered on savings deposits ‘might go up because of the growing lending and inflation risks.’
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