Key points
- 100 basis points = 1%.
- Fed typically moves rates in 25 bp increments.
- Precision matters in fixed income markets.
Example
If the Fed raises its rate from 4.25% to 4.50%, that is a 25 basis point (0.25 percentage point) increase.
In history
Between March 2022 and July 2023 the Fed raised rates 11 times, including four 75 bp moves in a row, for 525 bp in total.
Related terms