Livret A savings account rates are expected to be significantly reduced starting August 1. How can this be explained, and what will the new rates be?
Livret A savings accounts will yield much less starting next August
Currently, the Livret A savings account, the French people’s favorite savings product, pays 2.4% interest. But this rate could be significantly reduced in two weeks.
The Banque de France and the Minister of Economy and Finance, Eric Lombard, will announce today the rate that will be set as of August 1. It is expected to be around 1.7% or even 1.6%, a significant drop. Since 2009, the Livret A savings account has not seen such a sharp fall in its interest rate. It is expected to fall significantly due to the slowdown in inflation—the rate is recalculated every six months based on the average inflation rate.
The new interest rate would remain higher than the inflation rate measured in June, which stood at 1% over one year. The Livret d’épargne populaire savings account could also see its rate revised.
The Livret A savings account is the subject of much debate, both in terms of how its rate is set and how it can be used. In general, the French have tended to shun it this year, with record withdrawals since 2009. A further reduction in the rate would therefore likely prolong this trend.
