Due to inflation, which has risen sharply since the start of the war in Ukraine, the Banque de France should offer to raise the Livret A rate early. According to the applicable calculation rule, the rate would increase to a minimum of 1.25%. It is up to the government to decide.
Book A should soon yield more. After being increased from 0.5% to 1% in February, the Livret A rate could be increased again in May. A consequence of inflation which, according to INSEE, has risen sharply and reached 4.5% a year in March.
This spring increase would be a first. In most cases, the possible revision of the placement percentage of booklet A and the booklet on sustainable and solidarity-based development (LDDS) can take place twice a year: on 1 February and 1 August. But since July 2021, the governor of the Banque de France has the right to recommend an early change in the interest rate on May 1 and November 1, without waiting for the usual dates, if “the variation in inflation or market money is very important”. This has been the case since the beginning of the conflict in Ukraine.
Between 1.25% and 1.5%
How high will it be? Between 1.25% and 1.5%, predicts Philippe Crevel, director of the Savings Circle, interviewed by the Parisian† This interest rate is the result of a very precise calculation that takes into account the inflation of the last twelve months, increased by a quarter of a point, and the interbank short-term interest rate.
“This rate is calculated by the Banque de France. Traditionally, it leaves politics to politics. And the politician does absolutely what he wants,” explains Nicolas Doze, editor-in-chief of BFM Business.
In France, 54.9 million people have a livret A, with an average amount of 5,500 euros. This is the third favorite investment of the French, after checking accounts and life insurance.
The increase in the price of the booklet A systematically ensures a massive collection. Because even if the real return on the Livret A account remains negative, given inflation, it is always better to put your money there than to leave it in your current account.
Could this increase slow growth by encouraging the French to save? “With a negative yield, even at a rate of 1.3%, I doubt it will slow consumption hard,” says the Parisian Mathieu Plane, economist at the French Observatory of Economic Conditions (OFCE).
Another option for the government is to tighten up the rate of the popular savings account (LEP), reserved for low-income households. Currently reimbursed at 2.2%, it could go beyond 3%.
