The Livret A interest rate will double to 2% from August 1, the economy minister announced, pushing it to its highest level since 2012.
This increase is the result of inflation, which reached 5.8% in June over one year, indicated the statistics office Insee. Inflation could even reach 6.8% by the end of the year, he predicted.
Read more: Inflation in France is expected to reach 6.8% by the end of 2022
The Minister of Economy Bruno Le Maire confirmed the increase in an interview with Le Parisien.
This follows recommendations from France’s central bank, the Banque de France, which issued a statement saying: “[These rises] will support savers in the face of rising prices.
Livret A booklets are the most common in France. They are government regulated, tax and fee free, and their interest rate is automatically recalculated twice a year.
Read more: What are tax-exempt bank accounts in France?
The calculation is done in part by taking the average inflation rate for the last six months, and taking the average of the interbank exchange rates.
The Livret A interest rate had already doubled in February, rising from 0.5% (a historic low) to 1%. And while the new 2% rate looks sizable, it’s still well below June’s inflation rate of 5.8%.
In the same interview, Mr. Le Maire also indicated that the interest rate of the People’s Savings Book (LEP) would increase from 2.2% to 4.6%.
He added: “The LEP is the most effective investment against inflation.”
The LEP is also exempt from tax, but is only accessible to people whose income does not exceed a determined amount (€20,297 per year for a single person, for example).
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