Exceptionally, the Banque de France may increase the Livret A rate on November 1. However, despite high inflation, it has decided to maintain this rate at least until next February.
No exceptional increase in the Livret A rate in November
The Banque de France recently announced that it would not be proposing to the Minister of the Economy that the interest rate on the Livret A passbook savings account be increased on November 1, according to Le Parisien newspaper.
However, in accordance with regulations, the institution was in a position to take such a decision in order to pass on inflation, which has risen sharply in the euro zone. This is particularly true in France, where consumer prices rose by 5.6% year-on-year in September, according to INSEE's provisional estimate.
A significant revaluation took place this summer
Asked about the absence of a boost on November 1, the Banque de France points out that " intermediate revaluation is not an obligation, but a possibility ".
What's more, savers have already benefited from a significant rate hike in August, with the Livret A rising from 1% to 2%, and the Livret d'Epargne Populaire from 2.2% to 4.6%. Finally, against a backdrop of global economic slowdown,the Banque de France does not want to encourage savings at the expense of household consumption.
This doubling of the rate has not only helped to support the remuneration of individuals in the face of rising prices, while preserving social housing, but has also considerably increased inflows. In fact, over 4.49 billion euros net were paid into the Livret A, three times more than in August 2021. In contrast to the Livret A, euro-denominated products have seen their assets shrink to 12.4 billion euros since the beginning of 2022, as shown by a report published by France Assureurs at the end of August.
A 3% rate in February 2023?
While the Livret A interest rate will remain unchanged on November 1, the French monetary authority is already forecasting an increase in interest rates for 2023.
"In accordance with the regulations, there will be a further increase next February," she said on October 3.
The announced increase will depend on inflation and interbank rates. If the latter hold, the Livret A rate could be raised by one point or more. The same applies to the Livret d'Epargne Populaire and the Livret Jeune. The prospect of a further rise in interest rates is likely to have an impact on sales, which this year recorded their best August ever.
So, although it won't be immediate, the new Livret A rate hike announced by the Banque de France is sure to cheer up the French, who will need it in the face of skyrocketing energy prices in early 2023.