Lowdown on the Livret A Interest Rate Drop
Book A confirms: Lowering of interest rate scheduled for 1st August 2025
There's no denying it—the Livret A savings account holders in France are in for a bumpy ride this summer. Inflation statistics released by INSEE for April have sealed the deal; preparace yourself for a significant decrease in Livret A returns this summer.
‸áll illustration notre site / Freepik By Thibaut Lamy*, Head of service (Employment, retirement, taxes, investments) at notre site.fr. Originally published on
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With only three months left until you can savor the 2.4% interest rate on your Livret A, it's time to face the music. The interest rate for this tax-exempt savings product, cherished by 57 million French people, will dip on August 1, 2025. This decrease in inflation, with prices remaining contained at 0.8% in April according to the preliminary data published by INSEE on Wednesday, April 30, has played a major role in this decision. After an inflation rate of 1.6% in January and 0.7% in February, prices have once again stagnated in March.
Although this is a positive sign for consumers, it's a different story for those relying on Livret A savings. Its interest rate, revised twice a year on February 1 and August 1, is determined using a formula that takes into account inflation for the previous six months. To calculate the new effective yield as of August 1, 2025, we need to look at the inflation observed by INSEE between January and June 2025. If the rate remains low, around 0.7%, it would average 0.85% over the period.
€2.50 Reduction in Monthly Interest for Livret A at the Maximum Amount
Apart from decreasing inflation, the interbank rates (€ster), which also contribute to the calculation formula for the Livret A rate, are experiencing a steep decline. Having reached 3.66% in July 2024, they have plummeted with the lowering of the ECB's key interest rates to 2.167%. Between January and June 2025, they are expected to average 2.46%. This would result in an interest rate of approximately 1.70% for Livret A, as calculated using the formula (0.85% + 2.46%) / 2. That's a 0.7-point drop from the current yield and almost half of the 3% in effect until February 1, 2025.
Decrease in the Livret A rate: which safe investments should you turn to now? If the formula is strictly applied, a saver with a Livret A filled to the brim at €22,950 would receive only €32.50 in monthly interest from August 1, compared to the current €45.90. This translates to a €12.40 monthly loss that might be cushioned by the Bank of France's governor, François Villeroy de Galhau, and Bercy, by boosting Livret A's remuneration. Although this could happen, it's not very likely.
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‸Livret A ‸Interest rate ‸Yield ‸Inflation
The enrichment data reveals conflicting projections regarding the Livret A interest rate:- While consensus forecasts initially indicate a drop to around 2%, Philippe Crevel of the Cercle de l'épargne is concerned about a steeper decline to approximately 1.7%[1], citing ongoing economic pressures.- Low inflation might prompt policymakers to further reduce rates, as they are linked to inflation, among other factors. However, the current forecasts already factor in anticipated easing, including the BNP Paribas' prediction that the rate cut is already accounted for in 2025 financial plans[5].
The difference between the 2% and 1.7% projections might be attributed to differing assumptions about inflation and deposit flows, with the latter figure possibly considering weaker-than-expected economic growth (e.g., France’s IMF-revised 2025 GDP forecast of 0.6% and Q1 2025 growth described as "disappointing"[3]). The final rate will depend on updated inflation data and interbank rate trends closer to the August review date.
- The recent inflation statistics for April, as revealed by INSEE, indicate that the Livret A returns will significantly decrease this summer due to the decline in Livret A interest rate, which is determined by inflation rates over the previous six months.
- François Villeroy de Galhau, the governor of the Bank of France, may intervene to boost Livret A's remuneration, potentially cushioning the monthly loss of €12.40 for a saver with a Livret A filled to the brim at €22,950, but such an action is not very likely.
- While consensus forecasts initially point towards a Livret A interest rate drop to around 2%, economist Philippe Crevel of the Cercle de l'épargne predicts a steeper decline to approximately 1.7%, citing ongoing economic pressures.
- The final Livret A interest rate will depend on updated inflation data and interbank rate trends closer to the August review date, with policymakers potentially considering further rate reductions if inflation remains low.
