Bank of France Noyer Limits Cut In Savings Interest Rates

        By William Horobin
        PARIS--Rates on French regulated savings will fall only slightly to 0.75% from 1% in August after Bank of France governor Christian Noyer chose to disregard the strict application of a formula that would bring the rate lower and closer to the European Central Bank's rates.
        Setting the rates for France's popular savings accounts--the Livret A and the LDD--is a sensitive operation for Mr. Noyer, who also votes in rate decisions at the ECB.
        On one hand, the government of Socialist President Francois Hollande has pushed to maintain higher rates to reward savers who have around 360 billion euros ($390 billion) stashed in the Livret A and LDD. On the other hand, Mr. Noyer says reducing the rates further toward the ECB's 0.05% rate would fuel employment and growth by reducing the cost of credit.
        Mr. Noyer said Monday he decided to contravene the strict application of the formula that would have brought the rate on the popular Livret A and LDD accounts down to 0.5% from 1%. By deciding to break with the formula--based on consumer prices and money market rates--Mr. Noyer instead makes a non-binding recommendation to the government. His recommendation of 0.75% instead of 0.5% was accepted by the government.
        Mr. Noyer said his decision to not apply the formula is based on the expectation of "a slight increase in inflation by the end of the year," and with the aim of preserving the spending power of savers.
        Write to William Horobin at william.horobin@wsj.com
        (END) Dow Jones Newswires

        July 20, 2015 10:07 ET (14:07 GMT)

#FX
#Forex
#SaleForex
#BankOfFrance
#NoyerLimits
#CutIn
#SavingsInterestRates