The new LEP rate, currently 6% net of taxes, should be revealed at the end of the week, for application at the beginning of February. Unfortunately, it should be falling, to reflect the decline in inflation. Sudden or smooth decline? Status quo? Here are 3 possible scenarios.
See you next Friday, January 12. It is on this date, in fact, that INSEE will reveal the final inflation rate for the month of December. In the crowd, Franois Villeroy de Galhau, governor of the Bank of France, is expected to announce the new rates for settled savings accounts on February 1, 2024, the next chance for revision.
One thing is already certain: the Livret A rate will not change. Too bad, because his current remuneration (3%) is lower than the result of the regulatory calculation formula (around 4%) normally used for this revision. But we already know that there will be no revaluation, the government having decided, last July, to freeze its rate… until January 2025!
What will happen to the Popular Savings Account (LEP)? He is not affected by the frost. It is therefore likely to change on February 1, 2024. And, unfortunately, it will not increase. The decline in inflation, its main benchmark index, opens up rather the way down. How big? Here are the 3 possible scenarios.
Scenario 1: Applying the rule
Over the last few years, the executive has constantly repeated that the role of the LEP was to protect the savings of the most modest French people (those who have access to the product) from the rise in the cost of living. While inflation is now well on its way to falling, the LEP should logically follow.
Thus, in mid-January, when making his decision, the governor of the Bank of France could choose to let the LEP align with the average inflation of the 2nd half of the year, as provided for in the regulatory texts. In this case, the fall will be severe: its rate will increase from 6% to 4.10% from February 1.
Scenario 2: smoothing
When it comes to regulated savings, however, the Bank of France does not like blows. Thus, the need to avoid too sudden changes is often cited when its governor chooses to advise the government to short-circuit the calculation formula to set the rate of the Livret A or the LEP as it wishes. A scenario which, as we recently showed, is supposed to be the exception, but tends to become the rule.
Livret A: should we give the government the power to set its rate?
François Villeroy de Galhau could therefore choose to smooth the predictable drop in the LEP rate. This, in fact, should not be limited to February. Inflation forecasts for the first half of 2024, if they materialize, should also bring it to 3.5% in August, the second chance for revision of the year. Rest assured: it will not go any lower, as we explained to you in this article.
LEP: very bad news for the rate of the Popular Savings Book in 2024
Between 6%, currently, and 3.5% in 8 months, the government of the Bank of France could thus choose to set an intermediate level, not 4%, but 4.5% or 5%, just to soften the shock a little for the 10 million French people who hold a LEP. There are precedents. Last July, when its rate should have fallen from 6.1% to 5.6%, the government chose to maintain it at 6%.
Scenario 3: the status quo
This is, today, the most improbable scenario. The executive can also do choice of status quo, maintaining the LEP rate at 6%. What could his motivation be? At least one: maintain product appealwhile maintaining its pay differential with Livret A.
In this case, the LEP would even gain in attractiveness. Its real yield (that is to say its nominal rate adjusted for the rise in prices) would increase over the months, as inflation falls. This is expected around 2.5% at the end of the first half of 2024.