Livret A: Next stop at 2% or even below?

The Livret A rate was lowered from 3% to 2.4% on February 1 st , 2025, slightly below our expectations of last October (2.5%). This decision by the Ministry of the Economy is in line with the proposal of the Banque de France, which recommended strict application of the official formula. The interest rate on the Livret d’Epargne Populaire (LEP) was lowered from 4,0% to 3,5%, above the value suggested by the official formula, as we had anticipated. We expect the Livret A rate to fall further to 2% in August 2025, or even slightly below it. The strict application of the Livret A formula to our rate and inflation forecasts for February 2025 would lead to a Livret A rate of 1.7% in August. However, this forecast is subject to several uncertainties, and we expect inflation to pick up at the end of 2025, which leads us to believe that the Livret A interest rate could “only” be lowered to 2% in August. We believe that the LEP rate will be lowered to 3.0% if the Livret A rate is lowered to 2% , with LEP continuing to benefit from a "boost" compared to the theoretical formula.