The livret A rate is maintained despite the increase in inflation (Credits: 123 RF)
The inflation rate is a parameter that can cause the Livret A’s rate of return to vary. It climbed to 1.50% over one year in June. However, the Livret A rate should be maintained at 0.50%.
How is the Livret A rate calculated?
The rate of return of the Livret A is regulated. Its rate depends on a calculation formula corresponding to the half-yearly average of the inflation rate and short-term interbank rates (EONIA), rounded to the nearest tenth of a point. It cannot be lower than the floor rate of 0.50%. However, the government has the option of increasing the rate if it considers that the circumstances require preserving the purchasing power of savers. It takes its decision after consultation with the Governor of the Banque de France.
The Livret A rate can be revised twice a year, on February 1 and August 1. It is currently set at 0.50% since February 2020, its historic low.
The one-year inflation rate climbed to 1.50% in June
With the recovery in consumption, prices over the last twelve months have risen: according to INSEE, the one-year inflation rate has reached 1.50% and the Banque de France expects it to remain at this rate. level over the whole of 2021. However, inflation is a parameter that enters into the formula for calculating the Livret A rate and it is therefore likely to vary its rate.
The livret A rate will be maintained at 0.50% on August 1
If the inflation rate over one year reaches 1.50% in June, it is only 0.90% on average over the last 6 months. As for the average short-term interbank rates (EONIA), it is negative and stands at -0.56% over the last 6 months. According to the Livret A calculation formula, its “real” rate should therefore be 0.17%, rounded to 0.20%, below the floor rate of 0.50%. In the absence of exceptional circumstances, the Governor of the Banque de France, François Villeroy de Galhau, would have recommended to the Minister of the Economy and Finance, Bruno Le Maire to follow the calculation formula. The latter would have agreed with his opinion. As of August 1, the rate of return on the Livret A should therefore be maintained at 0.50%.
Rates are also maintained for LDDS, LEP, CEL and PEL
The rate of the LDDS (sustainable development and solidarity booklet) should also be maintained at 0.50% since its rate is equal to that of the booklet A.
The remuneration of the LEP (popular savings account) is indexed to that of the Livret A, with an increase of 0.5 point. It should therefore be kept at 1.00%.
The PEL (housing savings plan) and CEL (housing savings account) rates should not change either. The remuneration of the CEL is equal to 2/3 of that of the Livret A, rounded to the nearest 1/4 point. PELs opened since August 1, 2016 yield 1.00% and CEL 0.25%.