First, let’s demystify the term. “Basis points” is just financial jargon designed to make simple things sound complex. One basis point is essentially one one-hundredth of a percentage point. So, 25 basis points? That’s 0.25%.
Now, let’s put that into perspective. If the South African Reserve Bank (SARB) decided to cut interest rates by 25 basis points, they’ve essentially lowered the rate by 0.25%. If the interest rate before the cut was 7%, for example, it’s now 6.75%. It’s that simple.
Why does SARB use the term “basis points” instead of just percentages? Because financial types like their jargon. It’s also a more precise way to describe rate changes, especially when we’re talking about tiny increments like 0.01%.
In summary: 25 basis points = 0.25%. Simple maths, but an important shift for anyone with loans or investments tied to those rates. So when you hear “25 basis points,” just think of a quarter of a percent.
