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Basis Points and Percentages — Economics Blog

Basis Points and Percentages-

A basis point is one hundredth of a percentage point.

If the Bank of England cuts interest rates by 0.25% from 5.75% to 5.5%. This is a cut of 25 basis points.

Basis points are often used to talk about small movements in exchange rates, interest rates and bond yields

Not to Be confused with

  • Base Years.

When talking about an index such as the consumer price index. We start off with a base year, where the index is set to 100. This makes it easy to compare % changes since the initial base year.

See also