4 ms·

If you're a dummy like me, 25 bps means 0.25%.

mywittyname 5y ago
Percent-of-a-percent is how I remember it. More technically, a hundredth of a percentage point.
trelane 5y ago
Technically, it does not, raising 0.25% is always in relation to the existing value of the thing, so increasing a percentage by a quarter of a percent would mean increasing it by a quarter of a percent of its existing value. On the other hand, "basis percentage points" means something absolute, not relative to the existing level. Pedant out. :)
- trelane 5y ago
  Obligatory Jayne: "let's see... A quarter percent of nothing, carry the nothing, is.. nothing!"
- HWR_14 5y ago
  Pedantry is useless. It's very useful to know the difference between the two. It's similar to many other things where there are two concepts that people conflate into one word and then spend a long time complaining or creating humor about confusing the results.
- deleted 5y ago
  [deleted]
- monktastic1 5y ago
  The claim wasn't that "raising by 25 bps" should be interpreted the same as "raising by .25%", it was: > 25 bps means 0.25%. In a sense, that is technically correct: it does refer to .25% -- not of the current value but of the 100% value.
  - dmurray 5y ago
    While we're at it, we should remember that this isn't a unitless number although it's often confused for one. Interest rates are being raised by .25% per year.
nimbius 5y ago
imo this has been a comically glacial effort, and im not sure the feds 1.9% interest target by EOY is anywhere near aggressive enough to stave off 10% or greater inflation by Q4. What i really think are needed --Clinton era 4-5% rates-- are all but taboo to the market post-housing-collapse. nearly a year ago the fed was cheerleading "transient" inflation in an attempt to avoid culpability for the corporate credit bubble it created during 2008's post financial meltdown. the article is pretty fixative about 2018 but IMO this goes a long way back. Quantitative easing measures from from 2010 lke low credit and bond buyback were still going on in 2021. The coming to jesus moment for the fed that july bond buyback cessation targets would be a disaster was likely the 2021 holiday shopping slump, and we didnt start honestly talking about raising prime interest until febuary. the reason 1.9%, and the reason this is a desperate tightrope, is that the fed has the very real ability to blow up the corporate credit bubble with prime interest.
- throw0101a 5y ago
  > imo this has been a comically glacial effort, and im not sure the feds 1.9% interest target by EOY is anywhere near aggressive enough to stave off 10% or greater inflation by Q4. How much of the current inflation has anything to do with interest rates? You think oil/gas prices will care much about the Fed's action? And we still have supply chain issue before all geopolitical problems even started: just try asking network vendors what their lead times are for switches and routers. For consumers, Ford is shipping cars with missing functionality: * https://arstechnica.com/cars/2022/03/ford-ships-explorers-missing-chips-for-rear-seat-hvac-controls/ https://arstechnica.com/cars/2022/03/ford-ships-explorers-mi...
  - hgomersall 5y ago
    It might possibly have an effect, in the same way that anything that causes more unemployment and increases the likelihood of a recession might have an effect.
  - tryptophan 5y ago
    It has everything to do with it. If they were higher, people would go bankrupt, not have money to drive, use less gas/oil, thus reducing demand, thus reducing price, thus reducing inflation.
deleted 5y ago
[deleted]
analyst74 5y ago
Current rate, which is nearly 0, is also an important consideration. What this means is if you borrow at 0.25% interest rate yesterday, and it becomes 0.5% tomorrow, your cost of borrowing just doubled.

Percent-of-a-percent is how I remember it. More technically, a hundredth of a percentage point.

Technically, it does not, raising 0.25% is always in relation to the existing value of the thing, so increasing a percentage by a quarter of a percent would mean increasing it by a quarter of a percent of its existing value. On the other hand, "basis percentage points" means something absolute, not relative to the existing level. Pedant out. :)

trelane 5y ago
Obligatory Jayne: "let's see... A quarter percent of nothing, carry the nothing, is.. nothing!"
HWR_14 5y ago
Pedantry is useless. It's very useful to know the difference between the two. It's similar to many other things where there are two concepts that people conflate into one word and then spend a long time complaining or creating humor about confusing the results.
deleted 5y ago
[deleted]
monktastic1 5y ago
The claim wasn't that "raising by 25 bps" should be interpreted the same as "raising by .25%", it was: > 25 bps means 0.25%. In a sense, that is technically correct: it does refer to .25% -- not of the current value but of the 100% value.
- dmurray 5y ago
  While we're at it, we should remember that this isn't a unitless number although it's often confused for one. Interest rates are being raised by .25% per year.

nimbius 5y ago

imo this has been a comically glacial effort, and im not sure the feds 1.9% interest target by EOY is anywhere near aggressive enough to stave off 10% or greater inflation by Q4. What i really think are needed --Clinton era 4-5% rates-- are all but taboo to the market post-housing-collapse. nearly a year ago the fed was cheerleading "transient" inflation in an attempt to avoid culpability for the corporate credit bubble it created during 2008's post financial meltdown. the article is pretty fixative about 2018 but IMO this goes a long way back. Quantitative easing measures from from 2010 lke low credit and bond buyback were still going on in 2021. The coming to jesus moment for the fed that july bond buyback cessation targets would be a disaster was likely the 2021 holiday shopping slump, and we didnt start honestly talking about raising prime interest until febuary. the reason 1.9%, and the reason this is a desperate tightrope, is that the fed has the very real ability to blow up the corporate credit bubble with prime interest.

throw0101a 5y ago
> imo this has been a comically glacial effort, and im not sure the feds 1.9% interest target by EOY is anywhere near aggressive enough to stave off 10% or greater inflation by Q4. How much of the current inflation has anything to do with interest rates? You think oil/gas prices will care much about the Fed's action? And we still have supply chain issue before all geopolitical problems even started: just try asking network vendors what their lead times are for switches and routers. For consumers, Ford is shipping cars with missing functionality: * https://arstechnica.com/cars/2022/03/ford-ships-explorers-missing-chips-for-rear-seat-hvac-controls/ https://arstechnica.com/cars/2022/03/ford-ships-explorers-mi...
- hgomersall 5y ago
  It might possibly have an effect, in the same way that anything that causes more unemployment and increases the likelihood of a recession might have an effect.
- tryptophan 5y ago
  It has everything to do with it. If they were higher, people would go bankrupt, not have money to drive, use less gas/oil, thus reducing demand, thus reducing price, thus reducing inflation.

deleted 5y ago

[deleted]

analyst74 5y ago

Current rate, which is nearly 0, is also an important consideration. What this means is if you borrow at 0.25% interest rate yesterday, and it becomes 0.5% tomorrow, your cost of borrowing just doubled.