“It is wise to be careful”: the Governor of the Banque de France and the Minister of the Economy are expected to disclose the new Livret A rate on Thursday, currently at 3%. If an increase is expected for August 1, it could well be lower than what the law provides.
A rate of 4%?
Indeed, in the event of circumstances deemed exceptional, the authorities have the possibility of derogating from the calculation formula which takes into account on the one hand the rise in prices and on the other hand the interbank rates of the last few months, at which the banks are exchanging money in the short term.
This is what happened in February 2022 when the Banque de France proposed rounding to 1%, instead of 0.8%, then in February 2023, but in the other direction this time, when the institution had proposed 3% instead of 3.3%.
This time, if inflation remains at 4.5% over one year in June when the final figure from INSEE is published on Thursday, the formula for calculating the Livret A should result in a rate between 4% and 4.1%, according to experts. But the Banque de France already seems to be preparing the ground for a more limited increase.
Charge of 1.4 billion euros
“We must preserve the interests of savers on the one hand, of course, and on the other an ultra-sensitive sector for the French, which is the housing sector, because the Livret A is used to finance social housing in particular and more broadly real estate credit”, temporized Tuesday morning on franceinfo its governor François Villeroy de Galhau.
Faced with the “good news” for savers represented by the decline in inflation – which fell from 6% at the start of the year to 4.5% in the provisional estimate for June -, “I believe that ‘it is wise to be a little cautious on the Livret A rate while also thinking about good housing financing,’ he added, noting that ‘there is always a margin of appreciation’.
If a rate of around 4% “would have the advantage of being close to inflation and of guaranteeing a slightly negative or even zero real return”, estimated Monday in a note Philippe Crevel, director of the Circle of savings, of many players are pleading for them to be maintained at 3%.
“The saver was protected when rates became negative” a few years ago, with a floor (maintained) at 0.5%, reminded AFP Alexandre Holroyd, Renaissance deputy and chairman of the Supervisory Commission. the Caisse des dépôts et consignations, which manages 60% of the amounts deposited by the approximately 55 million French people holding a Livret A.
“It seems logical to me that the other side of the coin is that in the event of a very significant increase, the same movement exists to protect” social housing and local authorities, whose loans are partly indexed to the Livret A rate, he added.
In a press release released on Monday, the Social Union for Housing called for the rate to be maintained at 3%, arguing “that one point increase translates, in a full year, into an additional financial burden of 1.4 billion euros” for the donors, an amount which “would be added to the cost of the previous revaluations (…) which have greatly burdened the investment capacities of the HLM organizations”.
Compromise at 3.5%?
During an interview with AFP, the director general of the CDC Eric Lombard estimated that “it would not be logical for the Livret A rate, which is liquid, guaranteed and tax-free, to be the highest” among the products savings, while some are much more risky, and therefore traditionally better remunerated.
An increase in the rate also weighs on the banks, which manage around 40% of the amounts of the Livret A and the Livret de développement durable et solidaire. However, French banks have generally performed well in recent years.
In this context, “it is difficult to reconcile these contradictory interests” and “the authorities could choose a compromise solution with an increase in the rate of the Livret A and the LDDS to 3.5%”, estimates Eric Dor, Director of Economic Studies from the IESEG School of Management. A prediction shared by Philippe Crevel.