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

The difference in the yield on Italian and German benchmark government bonds, an indicator of investors’ concern about Italy, initially shrank from over 200 basis points to 190 on the morning of May 28th, but then returned to its earlier level. The Economist, "Italy’s new government collapses before even getting started," 28 May 2018 The market has already priced in a 25 basis points lift to the Fed funds rate. Annabelle Liang, The Seattle Times, "Asian markets rally ahead of expected US Fed rate hike," 25 Sep. 2018 Analysts are not expecting much more of a move higher from here, with more than half of those surveyed by Bloomberg expecting the yield to end the year within 25 basis points of 3 percent. Bloomberg.com, "Five Things You Need to Know to Start Your Day," 25 Apr. 2018 After a mid-May pause, the flattening that dominated the Treasuries market for months has roared back, sending the gap between two- and 10-year yields toward 40 basis points once again. BostonGlobe.com, "Bond traders brace for major moves in aftermath of Fed meeting," 12 June 2018 The rate differential between the U.S. and Mexico remains at 600 basis points, a premium that helps steady the peso against the U.S. dollar. Juan Montes, WSJ, "Bank of Mexico Raises Interest Rates," 20 Dec. 2018 The company charges from $1 to $4 per trade, and takes a small percentage (50 basis points) of the sale. Casey Newton, The Verge, "Coinbase thrived when cryptocurrencies crashed. Can it take the blockchain back to the mainstream?," 27 Sep. 2018 In November, for example, the difference between offers to buy and sell an Eventshares tax-reform ETF -- which launched without a lead trader -- spiked to 116 basis points, Bloomberg closing-price data show. Rachel Evans, Bloomberg.com, "There’s a Shortage of Expert ETF Traders Who Make the Market Tick," 23 May 2018 The Turkish lira was one of the few emerging-market currencies to strengthen Thursday, after Turkey’s central bank unexpectedly raised interest rates by 125 basis points. Ira Iosebashvili, WSJ, "Brazil Selloff Feeds Global Emerging-Markets Retreat," 7 June 2018

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

12 Mar 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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