France Slashes Livret A Savings Rate Amid Inflation Drop

France's finance ministry has reduced the interest rate on Livret A savings accounts to 1.7% from 2.4%, effective August 1, reflecting a decrease in inflation. The accounts, holding over 600 billion euros, are regulated based on central bank recommendations. This adjustment aligns with efforts to maintain a positive real return.

France's finance ministry announced a cut in the regulated interest rate for Livret A savings accounts, reducing it from 2.4% to 1.7%, starting on August 1. The decision affects millions of French savers who utilize these popular tax-free accounts.

The Livret A accounts, held by French citizens, contain more than 600 billion euros, as reported by the Caisse des Depots. This public finance body also highlighted that the interest rate adjustments follow a central bank formula that considers inflation and short-term interest rates.

The reduction in the interest rate was anticipated due to a decline in inflation over the past year. The finance ministry aims to offer savers a real return over inflation, even with the current interest rate drop.

(With inputs from agencies.)