Savers will soon have to put an end to the 3% remuneration of the Livret A. On Thursday, the European Central Bank announced its decision to lower its rates by a quarter of a point for the second time in three months. And this decision will have consequences for the preferred investments of the French, whose rate was frozen at 3% until February 2025 by Bruno Le Maire instead of being revised as planned by his calculation formula applied twice a year, in February and August.
Commercial banks hold cash in accounts at the ECB, remunerated according to the monetary institution’s deposit remuneration rate. They transfer this interest to their customers’ accounts. Savers were therefore the main beneficiaries of the rate increases carried out between 2022 and 2024. The remuneration of the Livret A, the most popular savings product in France, increased from 0.50% in 2022 to 3% today. The fall in rates could therefore penalise them.
Inflation is below 2%
In addition to the monetary policy decisions of the European Central Bank, the level of inflation also influences the rate of the Livret A: when it falls as is currently the case, the remuneration of the savings product moves in the same direction. It therefore remains to be seen how far the downward revision of the Livret A rate will go in February.
While inflation is expected to remain below 2% until the end of the year according to INSEE and even settle at 1.6% year-on-year in December, new ECB meetings are planned in October and December which could lead to further cuts in key rates. There are therefore many factors that could influence the next rate of interest on savings products.
In The EchoesThe director of the Cercle d’Assurance, Philippe Crevel, is betting on a range between 2.7 and 3%: “It will be an opportunity for the new government to revive consumption, a rate of 3% would also have a cost for the banks.” For his part, the director of economic studies at IESEG, Eric Dior, is betting on a more contained fall, around 2.9%, arguing that “Christine Lagarde warned that inflation could rise at the end of 2024.” On August 1, the popular savings account already lost one percentage point of performance, following the first monetary easing of the ECB, with a rate reduced from 5% to 4%.
Source: BFM TV
