basis point

noun

Definition of basis point

: one hundredth of one percent (as in the yield of an investment)

Examples of basis point in a Sentence

Recent Examples on the Web

At their most recent meeting, committee members appeared to be divided about whether to cut rates by as much as 50 basis points, or to keep them steady. Donna Borak, CNN, "Jerome Powell faces his biggest test yet in high-profile speech," 22 Aug. 2019 Financial markets currently suggest the Fed has a 98% chance of cutting its benchmark rate by at least 25 basis points by September. The Economist, "America has half a million fewer jobs than previously thought," 22 Aug. 2019 The firm is aiming to cut it by a total of 175 basis points this year, though progress can be harder to come by in later months, when banks typically generate less revenue. Fortune, "Citi to Cut Hundred of Trading Jobs–Proof That Industrywide Slump May Be Here to Stay," 31 July 2019 The company now also expects constant-currency adjusted earnings before interest and taxes margin to be slightly up in the range of 10 basis points, compared with its prior view of flat-to-slightly up. Aisha Al-muslim, WSJ, "Levi Strauss Shares Fall on Smaller Profit, Second-Half Sales Outlook," 10 July 2019 Britain’s 10-year yield fell three basis points to 0.689%, the lowest in almost three years. latimes.com, "U.S. Treasury yields hit lowest rate since 2016 as stocks rise," 3 July 2019 Traders are currently factoring in a 90% probability of a quarter-point cut at the Fed's next meeting on September 18 and another 25 basis point reduction when the Fed meets again on October 30, according to futures tracked by the CME Group. Paul R. La Monica, CNN, "The bull market just won't die," 11 Sep. 2019 Dye's forecast includes another 25 basis point cut after the Fed two-day policy meeting Dec. 10 to Dec. 11 and another quarter-point cut in June 2020. Susan Tompor, Detroit Free Press, "How do you make more money when the Fed cuts rates?," 11 Sep. 2019 Days with fewer presidential tweets tend to see positive returns of five basis points on average. Los Angeles Times, "J.P. Morgan creates ‘Volfefe Index’ to track effect of Trump tweets on interest rates," 8 Sep. 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'basis point.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of basis point

1962, in the meaning defined above

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Last Updated

8 Oct 2019

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The first known use of basis point was in 1962

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More Definitions for basis point

basis point

noun

Financial Definition of basis point

What It Is

A basis point is one hundredth of one percent.

How It Works

There are one hundred basis points in one percent.

Let's say Bank XYZ pays 2.54% interest on its savings accounts. A month later, it raises the rate to 2.75%. We would say that rate increased by 21 basis points.

Why It Matters

Basis points are in anything that is expressed as a percentage: interest rates, rates of return, bond coupons, rates of change and much more. Because tiny changes can have big effects, it is no surprise that the markets are concerned about hundredths of a percent.

Source: Investing Answers

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