For a year and a half, the Livret A rate stagnated at 0.50% net. With such remuneration, this investment no longer plays its role as a bulwark against inflation. According to forecasts, expected inflation for this year 2021 should be 1.50%. With its current rate, the real return on the Livret A is therefore -1%. In other words: savers lose money by letting their savings sleep on this investment. Could this change as of August 1? The elements of response.
The possible evolution of the Livret A rate according to its calculation formula
The level of inflation is taken into account in the method of calculating the interest rate of the Livret A. Mechanically, an overall increase in prices could therefore increase the return on the favorite investment of the French. But it is not so simple: the Livret A rate also depends on another index, the € STR, the short-term rate for loans taken out by banks. However, the € STR is negative, with an average over the last 6 months of -0.479% in June. Over this same period, inflation is 0.90%. Once these two data have been averaged, the theoretical rate of the Livret A comes out at just over 0.20%.
Fortunately for savers, the Livret A rate cannot be less than 0.50%. By strictly following the method of calculating the Livret A rate, no increase is possible in the short term. For this to become a reality, inflation would have to be maintained in the months to come, but also that the € STR should regain strength… Unless another parameter comes into play.
Could the government choose to increase the remuneration of the Livret A?
In mid-January and mid-July, the governor of the Banque de France sends his recommendations to the government for a modification, or not, of the Livret A rate. But the government can unilaterally decide on the return on this investment. A choice which could therefore theoretically come into force at the beginning of August. But nothing is less certain: during successive confinements, the French have accumulated more and more savings. Over one year, the outstanding Livret A and its false twin the Sustainable and Solidarity Development Booklet (LDDS) climbed 8%, reaching 469 billion euros. Now, the time has come for economic recovery. Households are therefore encouraged to spend and consume more, and therefore to draw on their savings. Raising the Livret A rate would therefore be contrary to current logic: this would encourage the French to continue to put money aside. It is therefore unlikely that the Ministry of the Economy will announce any increase in the near future.
However, this option of the government could well be used during the next revision of the Livret A rate. Deciding to increase the remuneration could indeed prove to be a precious asset to attract the favors of the French a few months before the presidential election. , since the next window for such a decision will be held in February 2022. From 0.50% net, it would then be possible to see the interest rate drop to 0.75% net. But this will not be enough to halt the loss of household purchasing power. Indeed, the Banque de France estimates inflation for the year 2022 at 1.20%. The real return on the Livret A would therefore always be negative, at -0.45%. This downside should not, however, obscure the advantages of this investment: savers take no risk, and the money deposited in it is available at any time.
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