Basis point
By loudcry
@loudcry (1043)
India
April 2, 2007 6:42am CST
One basis point is equivalent to 0.01%.
i.e 75 basis points is equivalent to 0.75%. In most cases it refers to intrest rates.
If the apex bank of a nation(Like RBI in India) raises interest rates by 75 basis points, and the original interest rate was 5% , the new intrest rate after the raise would be 5 + 0.75 = 5.75%.
1 person likes this
1 response
@harshadod (858)
• India
19 Sep 07
I think it is an appropriate time to respond.
The Fed has cut interest rate by half point and the stock markets have responded.This is seen in response to the turmoil of housing and financial markets. The cheap money may work wonders or as many economists opine, is a bad band-aid, which will only increase the wound.
But the contrarians think that the interest rates throughout the world will soften.
What is your take on this?
@loudcry (1043)
• India
25 Sep 07
The cut in interest rates will pump liquidity in the market, but this will only lead to more sub prime lending in the long term. The current sub prime problem cannot be remedied ,we have to sit through the bloodshed and hope to survive.
The answer as always is free market economics. Let the market decide the interest rates.The banks should be freed of the whims and fancies of the apex banks , the heads of which,often act on the behest of the politicians. Needless to say the politicians themselves are influenced by elections and vote bank concerns.
@harshadod (858)
• India
25 Sep 07
Left to free market economics only, it will be a very painful process and more time consuming. Intervention in some or the other forms may help. I am not an expert, but making sense of what I have read of Paul Krugman and etc.
http://www.pkarchive.org/.
Read the introduction to the Keynes book. I did not understand much of it, but it still helps.
