Livret A: bad news, its interest rate will plummet on February 1, 2025

The yield on the French’s favorite savings account will fall significantly on February 1st. After 18 months of freezing at 3%, it should land at 2.50%, in the wake of inflation which has contracted significantly in 2024.

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Hard blow for the purchasing power of French savers. The interest rate of Booklet A will decrease on February 1, 2025, on the occasion of the next review of its performance. Frozen at 3% for 18 months since August 1, 2023, his remuneration should contract, to around 2.5%. At issue: inflation which fell significantly in the second half of 2024. According to the latest statistics revealed by INSEE this Tuesday, January 7, the increase in consumer prices was “only” 1.3% in December. 2024. However, the Livret A rate is recalculated every six months, and half depending on the evolution of thenon-tobacco inflation annual average over the past semester. Having gone from 2.2% last July to 1.1% in November, this indicator should fall to 1.37% over the reference period, compared to 4.1% a year earlier.

Fortunately, the rise in prices is not the only component of the Livret A calculation formula. Interbank rates (to which financial institutions lend among themselves) are also taken into account in the equation. A percentage which, although it has also declined in recent months according to cuts in key rates from the European Central Bank (BCE), reached on average 3.4% between July 1 and December 31. With inflation at 1.37% and interbank rates at 3.4%, the strict application of the formula for calculating the Livret A rate thus results in a result of 2.4%.

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A largely positive real return for Livret A

And it is this interest rate that the Minister of Economy and Finance, Eric Lombard, intends to adopt. If the tenant of Bercy will not communicate his decision until around January 15, he has already clearly suggested that the yield of Livret A will indeed decline, on Monday January 6, on France Inter: “The governor of the Bank of France, François Villeroy de Galhau, will make a proposal to the Minister of Finance, most certainly a reduction. Formula that would bring us around 2.5%.”

The former general director of the Caisse des Dépôts et Consignations (CDC), an organization which manages around 60% of the Livret A money to lend to social housing organizations, however specified that the 57 million holders of this product will not lose in exchange. “The Livret A rate will fall, but inflation has fallen sharply, since it is around 1%. Savings are not only protected but they allow real wealth to increase.he argued. Indeed, with a booklet filled outaverage outstanding of 7,077 eurosTHE annual interest will certainly go from 212 euros with a rate of 3% to 177 euros with a rate of 2.5%, for a shortfall of 35 euros. But according to the Banque de France, inflation should be limited to 1% in June 2025. Barring any surprises, the real return on Livret A (inflation deducted) will therefore be largely positive between February 1 and August 1, the date of the next revaluation of the Livret A rate.