Cadence Research · Reviewed 2026-07-30
What is a basis point?
A basis point is one hundredth of one percentage point, written as 0.01%. Central banks and markets use basis points to describe small interest-rate changes precisely. For example, a 25-basis-point increase raises a rate from 4.00% to 4.25%, while a 50-basis-point increase raises it to 4.50%.
Why it matters
Rate moves are often discussed in basis points because the increments matter for financing costs and for how forcefully a central bank is adjusting policy.
How it appears in official communication
Official decisions may state a new rate level rather than the size of the move. Comparing the new level with the previous level shows whether the change was 25, 50, or another number of basis points.
A common misunderstanding
One basis point is not one percentage point. One percentage point equals 100 basis points.
Explore the live record
Related guides
Primary sources
- Monetary Policy: What are its goals? (Federal Reserve)
- Monetary policy (European Central Bank)
How Cadence handles AI-generated scoring and methodology
The Cadence Brief
The one number that moved central bank pricing — delivered each weekday morning.