towards a probable rate of return of 2% on August 1

by time news
The Livret A rate varies in particular according to inflation. Philippe Devanne / stock.adobe.com

Soaring inflation will mathematically lead to higher interest at the next revision.

«There will be a new increase on August 1st.“. Invited this Thursday morning at the microphone of RTL, the governor of the Banque de France, François Villeroy de Galhau, confirmed that the rate of the livret A will logically be revised upwards during the next revision. Asked about the extent of the new increase, the latter kicked into touch. “I do not comment on the figures, it will depend on inflation and interest rates mid-July“, did he declare. Nevertheless, a figure other than 2% “seems highly unlikely», underlines Philippe Crevel, economist and director of the Cercle de l’épargne.

This would be its second increase of the year. On February 1, his remuneration had already doubled, going from 0.5% to 1%, under the effect of inflation (+2.8% over one year in December 2021). A break, until then this rate had been stuck at its floor of 0.5% since February 1, 2020.

A known calculation method

To justify this figure of 2%, Philippe Crevel is based on the calculation of the rate of the booklet A, a very French gas plant. It is equal to the average between two indicators (without being able to go below 0.5%). Firstly “the half-yearly average of short-term rates in euros (€STR)», Explains the Bank of France. This is an indicator unknown to the general public, published every morning by the ECB, which shows at what price banks in the euro zone can borrow money on a day-to-day basis. It currently varies around -0.58%. On the other hand “inflation in France measured by the half-yearly average of the variation over the last twelve known months of the monthly INSEE consumer price index, excluding tobacco, for all households“, again according to the Bank of France. Translation: each month INSEE gives inflation figures for one year. Just take that data over the past six months and average it out.

However, it has not escaped anyone, inflation has made a comeback in France. Estimates for the month of June amount to 5.8% over one year, according to INSEE. This gives an increase in average prices of 4.46% over the last six months. With a €STR at -0.58, the average of the two indicators gives 1.94% rounded to 2%. A figure that also applies to the Sustainable and Solidarity Development Booklet.

A cost for the state

If this sounds like good news for the saver, itwould not compensate for the effects of inflation», warns the think-tank, which calculates that the real return «would be negative over the year by more than three points“. But it will weigh heavily on state finances. The Cercle de l’Epargne calculates that “Raising the Livret A rate by one point will cost the banks and Caisse des Dépôts 3.6 billion euros for this product alone.».

Another factor likely to change (upward) the rate of return of the booklet A: a boost from the State. Because if it is the Banque de France which does the calculation, the State is free to place it higher. A hypothesis “more than likely“, according to Philippe Crevel.

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