France’s finance ministry said on 16 July it will lower the regulated interest rate on Livret A tax-free savings accounts to 1.7% from 2.4% with effect from 1 August, endorsing a recommendation issued earlier in the day by the Bank of France. The 70-basis-point cut is the steepest since 2009 and follows a reduction from 3% on 1 February, leaving households facing a halving of returns since the start of the year. French savers hold more than €600 billion in Livret A and its twin product, the Livret de développement durable et solidaire (LDDS), according to the Caisse des Dépôts. The rate is updated twice a year using a formula linked to consumer-price inflation and short-term market rates. With headline inflation easing to about 1% in June, policymakers said the new level still offers a positive real return. “The fixation of the rate at 1.7% continues to protect the purchasing power of holders,” the central bank stated. Lower remuneration eases funding costs for lenders and for social-housing bodies that borrow at the Livret A rate. Trade publication Agefi estimates the change will save banks roughly €2 billion in interest this year. The LDDS rate will mirror the new 1.7% level, while the yield on the Livret d’Épargne Populaire (LEP), aimed at low-income households, will slip to 2.7% from 3.5% after the government granted a partial concession above the formula rate.