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Finance & Banking vocabulary · Interest & Exchange Rates

Basis point

Meaning in finance & banking, with examples

nounCommon term

In finance & banking, basis point means: One hundredth of one percentage point (0.01%). It is used to describe small changes in interest rates and yields precisely.

In Turkish: baz puan

How it is used

Used in treasury, pricing and market news; often written bp or bps and said 'bips'. A rate rise from 5% to 5.25% is a 25 basis point increase. Professionals avoid 'a 0.25% increase', which is ambiguous.

Example sentences

  1. The central bank raised its policy rate by 50 basis points.

  2. We can lower the loan margin by 25 basis points if you move your payroll to us.

Common collocations

  • raise by 50 basis points
  • cut by 25 basis points
  • basis point increase
  • a few basis points
  • interest rateThe price of borrowing money, shown as a percentage of the amount borrowed or saved for a period, usually one year.
  • policy rateThe main interest rate set by a central bank to steer the cost of money in the economy and bring inflation towards its target.
  • variable rateAn interest rate that can go up or down during a loan or deposit term, usually because it follows a benchmark rate.
  • APRShort for annual percentage rate: the yearly cost of a loan or credit card shown as a percentage, including interest and certain required fees.

This word in other fields

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

More terms: Interest & Exchange Rates

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