Sberbank Leader Deems Optimal Interest Rate as "Neutral" Level
In a notable address at the Financial Congress in St. Petersburg, Herman Gref, the head of Sberbank, proposed a significant shift in Russia's financial landscape. Gref suggested that the Central Bank of Russia should adopt a neutral key interest rate of 14%, a move that could potentially ease borrowing costs for businesses and consumers, and urged citizens to invest in stocks instead of bank deposits.
This proposal, if implemented, could have far-reaching implications for the Russian stock market. Lowering or stabilizing the key interest rate at 14% from currently higher levels (21% as of June 2025) would likely make borrowing more affordable, improving corporate profitability prospects and stimulating economic activity. This, in turn, could boost investor confidence and stock market valuations, according to recent studies.
Gref's encouragement for citizens to shift their savings from bank deposits to stocks implies an effort to channel household capital into the equity market. This could increase demand for Russian equities, providing liquidity and price support to the stock market. It could also help diversify household investment portfolios away from low-yielding deposits, enhancing market dynamism.
However, the broader economic outlook remains challenging due to rising military spending, inflation, and geopolitical uncertainties. The first half of 2026 is expected to be difficult for the economy, which could constrain the upside potential of the stock market despite interest rate easing and increased retail participation.
The reduction in the Central Bank's rate, advocated for by Gref during the Financial Congress, was a significant step towards a more accommodative monetary policy stance. This would be viewed positively by equity investors as a sign of policy support for growth.
Despite the promising outlook, Gref acknowledged that there aren't many investors willing to buy shares in an SPO or IPO due to the volatility of the stock market. He suggested that a deposit with a real return of 15% a year, guaranteed, would be more attractive to investors than securities in the stock market.
The head of Sberbank, Gref, also emphasised the need to redirect Russian citizens' funds from bank deposits to the stock market. He based this suggestion on a study by Sberbank, which shows that the neutral rate is 14%.
This article, published by RIA "Novy Day" and authored by Anastasia Smirnova, marks a pivotal moment in the Russian financial sector's narrative. As the Central Bank of Russia considers Gref's proposals, the future of the Russian stock market hangs in the balance, with the evolution of economic and geopolitical challenges playing a crucial role in determining its trajectory.
The reduction in the Central Bank's key interest rate to 14% as suggested by Herman Gref could make borrowing more affordable for businesses and potentially boost the Russian stock market by increasing investor confidence and stock market valuations. Additionally, Gref's encouragement for citizens to shift their savings from bank deposits to stocks could stimulate increased demand for Russian equities, providing liquidity and price support to the market, and help diversify household investment portfolios away from low-yielding deposits.
