basis point
C2Formal, Technical, Financial
Definition
Meaning
One hundredth of one percentage point (0.01%), used in finance to describe the change in interest rates, yields, or other financial percentages.
A standard unit of measurement for changes in interest rates and financial instruments, particularly useful for describing small, precise changes.
Linguistics
Semantic Notes
The term is a nominal compound (noun + noun). It is never used to describe a standalone value, only to denote the *size* of a change or difference.
Dialectal Variation
British vs American Usage
Differences
No significant differences in meaning or usage. Spelling conventions apply to surrounding text (e.g., 'centred' vs. 'centered').
Connotations
Technical precision; perceived as jargon outside financial contexts.
Frequency
Equally frequent in UK and US financial, economic, and central banking discourse.
Vocabulary
Collocations
Grammar
Valency Patterns
[Number] basis point(s) + (increase/rise/cut)a + (rise/cut/increase) + of + [Number] basis point(s)by + [Number] basis point(s)Vocabulary
Synonyms
Strong
Neutral
Weak
Vocabulary
Antonyms
Phrases
Idioms & Phrases
- “on a bp basis”
Usage
Context Usage
Business
Essential in reporting on central bank decisions, bond yields, and loan pricing.
Academic
Used in economics, finance, and econometrics papers discussing monetary policy or financial markets.
Everyday
Very rare; only in detailed news reports about interest rates.
Technical
The default, precise unit in fixed-income analysis, risk management, and derivatives pricing.
Examples
By Part of Speech
verb
British English
- The central bank is expected to basis-point hike cautiously.
- Analysts basis-point their forecasts after the inflation data.
American English
- The Fed is expected to basis-point hike cautiously.
- Analysts basis-point their forecasts after the inflation data.
adverb
British English
- The yield rose basis-point by basis-point.
- Rates adjusted almost basis-point.
American English
- The yield rose basis point by basis point.
- Rates adjusted almost basis-point.
adjective
British English
- A basis-point move was anticipated.
- The basis-point analysis showed marginal tightening.
American English
- A basis-point move was anticipated.
- The basis-point analysis showed marginal tightening.
Examples
By CEFR Level
- A basis point is a very small part of a percent.
- The interest rate increased by 25 basis points, which is 0.25%.
- Following the announcement, government bond yields fell several basis points across all maturities.
- The market had priced in a 75-basis-point hike, so the central bank's 50-basis-point decision caused a rally in short-term bonds.
Learning
Memory Aids
Mnemonic
Think of a percentage point as a whole pound/dollar. A basis point is a single penny/cent of that pound/dollar (1/100th).
Conceptual Metaphor
FINANCIAL MEASUREMENT IS PRECISE METROLOGY (using calibrated, fine-grained units).
Watch out
Common Pitfalls
Translation Traps (for Russian speakers)
- Never translate as "базисный пункт" in isolation—it's opaque calque. Use "базовый пункт" or, more clearly, explain as "0.01%" or "сотая доля процентного пункта".
Common Mistakes
- Using it for an absolute rate (e.g., 'The rate is 150 basis points' is wrong; 'The rate *rose* by 150 basis points' is correct).
- Confusing 'basis point' with 'percentage point' (e.g., a change from 5% to 6% is 100 basis points, or one percentage point).
Practice
Quiz
What does a change of 150 basis points represent?
FAQ
Frequently Asked Questions
It follows normal rules: 'one basis point', 'fifty basis points'. The abbreviated form 'bps' is often used for the plural.
In fast-paced financial communication, 'basis point' is shorter, clearer for discussing changes, and avoids confusion with decimal percentages (e.g., 'up 10 bp' vs. 'up 0.10%').
Extremely rarely. Its use is almost exclusively confined to financial and economic contexts where precise measurement of percentage changes is critical.
A percentage point is 1%. A basis point is 1/100th of a percentage point. Therefore, 100 basis points = 1 percentage point.