The interest rate on Livret A savings accounts is to double to 2% from August 1, the economy minister has said, pushing it to its highest level since 2012.
The rise is a result of inflation, which hit 5.8% in June year-on-year, statistics bureau INSEE said. Inflation may even reach 6.8% by the end of the year, it has predicted.
Read more: Inflation in France expected to reach 6.8% by end of 2022
Economy Minister Bruno Le Maire confirmed the rise in an interview with Le Parisien.
It comes following recommendations from the French central bank, the Banque de France, which issued a statement saying: “[These rises] will support savers faced with rising prices.”
Livret A savings accounts are the most common in France. They are government-regulated, tax-free and fee-free, and their interest rate is re-calculated automatically twice a year.
Read more: What are the tax-free bank accounts in France?
The calculation is made partly by taking the average inflation rate of the last six months, and by taking the average of the interbank exchange rates.
The Livret A interest rate was already doubled in February, passing from 0.5% (a historic low) to 1%. And while the new 2% rate appears to be considerable, it is still far below the June inflation rate of 5.8%.
In the same interview, Mr Le Maire also said that the interest rate on the Livret d'épargne populaire (LEP) savings account would rise from 2.2% to 4.6%.
He added: “The LEP is the most effective investment against inflation.”
The LEP is also tax-free, but is only available for people whose income does not exceed a set amount (€20,297 per year for a single person, for example).
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