expression

basis point

one hundredth of one percent

In more detail

1. (noun) a unit equal to one hundredth of a percent (0.01%), used especially when discussing changes in interest rates or yields

2. (noun) a fundamental assumption or starting point for a calculation or agreement

Examples

1. The central bank raised interest rates by 50 basis points.
2. The contract was negotiated on the basis point that both parties wanted a fair deal.

How to use basis point

Basis point is a technical term primarily used in finance, banking, and investment contexts when discussing precise changes in interest rates, bond yields, or credit spreads. It avoids ambiguity when comparing percentages (e.g., a move from 2% to 3% is 100 basis points, not 1 percentage point in relative terms). The term is less commonly used in sense 2, where 'foundation' or 'foundation' is preferred.

Common phrases

basis points increase
basis points decrease
basis points higher
basis points lower
a 25 basis point rise

Synonyms

percentage point · bip · bp

A common mistake

Confusing basis points with percentage points: a 1% rise is 100 basis points, not 1 basis point.

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