What is a BPS?

BPS stands for 'Basis Points,' a term commonly used in finance to describe percentage changes or differences in interest rates, yields, or other financial percentages. One basis point is equal to one hundredth of a percent, or 0.01%. For instance, if an interest rate increases from 2.00% to 2.50%, it has risen by 50 basis points. The term helps prevent confusion when discussing small changes in percentages, which are common in financial markets.