From February 1, 2025the interest rates on the Livret A and the Livret d'épargne populaire (LEP) will experience a notable drop. Currently set at 3 % for Livret A and 4% for LEP, these two popular regulated investment products will lose a few points.
This revision is linked to the reduction in inflation and interbank rateskey elements in the calculation of these savings accounts.
Although the reduction in rates is less favorable for savers, it marks an adaptation to current economic conditions and reflects the authorities' desire to maintain rates adjusted according to economic developments.
Why these rate cuts?
The drop in Livret A and LEP rates mainly results from the reduction in inflation, which fell sharply over the course of 2024. Inflation, which was on average around 6% in 2023passed under the 2 % in October 2024with a forecast of 1,2 % for the end of the year. This decline in inflation directly influences the formula for calculating the rates of these booklets.
Furthermore, interbank rates, which are around 3.5% on average over the last six months of 2024, also contribute to this revision, because they are integrated into the calculation of regulated savings rates.
This situation encourages financial authorities to adjust rates to ensure a fair return without harming the stability of the financial market.
What will the new rates be?
According to forecasts, the rate of Booklet A will pass to approximately 2,5 %while the LEPintended for low-income households, should be revised to 3 %. These rates, although lower than those of 2024, remain attractive for secure savings in times of low inflation.
The calculation of the LEP is based on the average of the half-yearly inflation or on the Livret A rate increased by 0,5 pointaccording to the most advantageous formula for the saver.
Compared to other savings products on the market, the Livret A and the LEP retain their advantage of liquidity and absence of taxationwhich remains an asset for those who want savings available immediately.
What will be the impact for savers?
For the millions of French people holding a Livret A or LEP, this drop means slightly lower returns on their savings. For example, for a saver with 10 000 euros on a Livret A, the annual return would increase from 300 euros to 250 euros with the new rate of 2.5%. Likewise, for holders of a LEP, the reduction to 3% will result in a reduced return.
However, these savings products remain tax-advantaged and risk-freeoffering appreciable security in a context of moderate inflation.
Although some savers may consider alternatives for higher returnsthe Livret A and the LEP continue to appeal thanks to their ease of access and their securityparticularly for savers looking for safe and risk-free investments.
