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Definition

<p style="text-align: justify;">One hundredth of one percent. This term is often used in the <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">debt</span> <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">markets</span> to refer to slight changes in the effective <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">yield</span> on debt <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">instruments</span> such as government <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">bonds</span>. It is also used when talking about <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">interest rates</span>. Thus, a 25-basis point drop in the <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">repo rate</span> means that it was reduced by a quarter of one percent by the <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">Monetary Policy Committee</span> (MPC).</p>