Rate moves are expressed in “basis points (bps),” equal to 1/100 of a percentage point and central banks, including the Federal Reserve, typically opt for 25 basis point interest rate changes. However, more significant moves are occasionally chosen, indicating a sense of urgency. For instance, the Fed delivered multiple 50 bps and 75 bps hikes during the 2022 tightening cycle, signaling an urgency to control inflation and causing risk aversion in financial markets.
