The Banque de France (BdF) is proposing to lower the rate on Livret A passbook savings accounts from 3% to 2.4% from February 1, while the rate on Livret d'épargne populaire (LEP) passbook savings accounts for low-income households would fall from 4% to 3.5%, its governor François Villeroy de Galhau told the Senate Finance Committee on Wednesday.

These recommendations have yet to be approved by the government.

The interest rate on the Livret A, whose calculation formula is based on the rate of inflation, gradually climbed to 3% last year from an all-time low of 0.5% in 2020.

The proposed rate of 3.5% for the Livret d'épargne populaire is "significantly higher than the mechanical formula of 2.9%" based on inflation, explained François Villeroy de Galhau to the senators.

(Written by Kate Entringer)