(Adds dropped word in headline)
PARIS, July 10 The French Finance Ministry said on Thursday it was cutting to a fresh record low the regulated interest rate on tax-free savings accounts hugely popular with the French public.
The ministry set a rate of 1.0 percent from Aug.1, trimming it from a already record low of 1.25 percent, but cutting less than the 0.75 percent recommended by the central bank.
Despite the low interest rate offered on the accounts, French savers have put record amounts of spare cash into them after the government raised the ceiling on how much can be kept in the accounts.
With 63 million accounts open, deposits are at record highs at 268.6 billion euros ($366.38 billion) in May for the most popular account known as Livret A, according to the CDC state bank.
The French have a further 102.4 billion euros stashed away in similar accounts known as LDDs.
The Bank of France based its recommendation on a formula linked to the latest inflation rate and money market rates.
Data on Thursday showed that annual inflation fell unexpectedly last month to only 0.6 percent, the lowest since November 2009 when France was emerging from short bout of inflation during the financial crisis. ($1 = 0.7331 Euros) (Reporting by Leigh Thomas and Yann Le Guernigou; Editing by Ingrid Melander)