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August's Yield Rate on the Popular Savings Account (Livret d'épargne populaire) remains under 1%?

Decline in inflation persists in April, carrying on the trend from earlier in the year. This decrease is projected to continue, affecting Least Developed Country's (LEP) yield by August 1st. The question remains, how much lower can it go?

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Steady decrease in inflation persists since January, with April showing a continuation. This may...
Steady decrease in inflation persists since January, with April showing a continuation. This may result in a reduced LEP yield by August 1st. The question remains though, how much lower can it go?

Headline:Is the Decline of the LEP Yield Unavoidable? A Look at the Link Between Savings Books, Inflation, and Interest Rates

*By Quentin Bas Lorant, Financial Journalist

It's clear as day: the LEP (Popular Savings Book) is looking at another drop in its interest rate. After hitting a high of 3.5% in February 2025, it’s been on a steady decline, and might lose its allure this summer. What's causing this slow burn? Simple—amazingly low inflation rates dominant since the beginning of the year. Statistics from France's National Institute of Statistics and Economic Studies (INSEE) show that consumer prices, excluding tobacco, rose by just 0.8% year-on-year in April (up from 0.7% in March and February, and 1.6% in January).

So, what does this mean for the LEP? The average inflation rate over January to June 2025 will set the next interest rate for the LEP, starting August 1^{st}. With the first four months in the books, it’s likely that the average annual inflation rate will fall below 1% for this first semester. That theoretical drop would be over three times lower than the current LEP rate—scary stuff!

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But don't fret, LEP holders. A severe drop like that isn't happening. A decree from January 27, 2021 enforces a strict rule: the LEP rate can't dip lower than the Livret A rate, plus a 0.5% margin. Plus, Livret A rates are predicted to fall to 1.7% on August 1st. This means, even if inflation plunges below 1%, the LEP can't slip beneath 2.2%. The floor rate can even rise higher. Both the Bank of France's Governor François Villeroy de Galhau, and Minister of Economy, Bruno Le Maire, have the power to override the calculation formula, proving the case with four past revisions, such as maintaining the LEP rate at 3.5% last February when the formula suggested a rate of 2.9%.

Livret A: An Option to Beat the Ceiling and Bolster Interest Returns

Are You a Smart Saver? Test Our Savings Book Comparator Today!Livret A and LEP are intertwined; their rates locked in a dance with inflation. So, how far can the LEP yield fall? If the Livret A slides below 1% and inflation stays low, the LEP's minimum rate, formed by the combination of the Livret A and the inflation margin, would adjust accordingly but likely won't fall below a level that preserves a positive real yield to shield savers. In other words, the LEP's minimum rate will remain high enough to not trail too far behind inflation.

* Related Topics: LEP, Interest Rate, Livret A, Inflation, Yield

Sources: 1, 3, 4

  1. Given the current trends in inflation and the set rules for LEP and Livret A, concerned investors might consider alternative options in the realm of personal-finance for potentially higher investments,, such as stocks or bonds in the business sector, to diversify their financial portfolio and mitigate potential losses.
  2. As the LEP's rate continues to react to the fluctuations of inflation, it is essential for individuals focusing on personal-finance to stay informed about the finance industry and economic indicators such as interest rates, as understanding these factors can help make well-informed decisions when it comes to saving and investing.

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