Okuzeka
Economics vocabulary · Economic News and Data

Basis point

Meaning in economics, with examples

nounCommon term

In economics, basis point means: One hundredth of a percentage point (0.01%), used to describe small changes in interest rates and bond yields precisely.

In Turkish: baz puan

How it is used

Standard in central bank and market news: the bank raised rates by 25 basis points, a quarter of a percentage point. Written bp or bps, and often pronounced bips by traders. 100 basis points equal one percentage point.

Example sentences

  1. The central bank raised its policy rate by 250 basis points to 17.5%.

  2. Ten-year bond yields fell 15 basis points after the inflation data.

Common collocations

  • 25 basis points
  • raise rates by 50 basis points
  • a 100-basis-point cut
  • basis points higher
  • percentage pointThe simple difference between two percentages: a rise from 3% to 5% is an increase of two percentage points, not of 2%.
  • policy rateThe main interest rate set by a central bank, which guides the rates that banks charge each other, businesses and households.
  • rate hikeAn increase in the central bank's main interest rate, usually made to cool demand and bring inflation down.
  • rate cutA reduction in the central bank's main interest rate, usually made to make borrowing cheaper and to support growth and jobs.
  • interest rateThe price of borrowing money, shown as a yearly percentage of the amount borrowed; for savers, it is the return they earn on deposits.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Economic News and Data

Practise with graded reading

Reading at the right level is the fastest way to make new words stick. Pick free English books by level:

This page explains English vocabulary for learners. It is not financial advice.