I have always seen( since 1990s) that the Fed changes( cut/increase) interest rates in quarter point increment /decrements in USA that affect the world bond, stock market and borrowing rates, while I see world news where the ECB cuts by 10 points and India by unconventional 35 basis points and again.
According to A Model for the Federal Funds Rate Target at page 13
changes as small as 6.25 basis points were sometimes observed prior to 1990
Similarly, according to The Relationship Between the Federal Funds Rate and the Fed's Federal Funds Rate Target: Is It Open Market or Open Mouth Operations? at page 4:
In late 1989 the Fed began the practice of adjusting its funds rate target only in multiples of 25 basis points. Prior to that target changes were made in various amounts, with changes as small as 6.25 basis points.
I'm pretty sure it's just a policy that the Fed seems to follow. I know of no mechanical reason why they couldn't use more precise increments, but possibly for simplicity (or tradition) they choose to use more granular rates than other countries seem to.
Keep in mind that influencing interest rates is an inexact science. The Fed will set rates at a certain value with the goal to increase (or decrease) spending and borrowing in order to influence inflation and other key economic measures. So there's really not much benefit gained by issuing bonds at more fine-grained rates since the market can dictate an effective interest rate via the price that they decide to pay for the new bonds.
It's like having a volume knob on your stereo with 100 notches instead of
10 11. Having extra precision doesn't really buy you that much, and just makes it harder to decide what volume you want (you can more easily choose if 5 or 6 is better then you can 53 or 54).
If Fed is really using statistical techniques, then it is impossible to come at an answer in multiple of 25 points unless they are targeting an objective, else they are using guess work and using tradition as the excuse. OLD quarter point system, could benefit the ultra rich, they should use the decimal points increase similar to stock market.
Doctors prescribe antibiotics or other medicine by weight very precisely in developed countries like USA, but in developing countries a child is given half of the antibiotics( where the child may be even 1/5 th weight of adult dose or 3/4th. So in Medical science we progressed, but not in banking.
With that said, there is no real reason for this kind of policy/tradition or simplicity.
Ask big corporation how even a single point change affect: $9 trillion corporate debt
Or ask a student how does a single point affect , students collectively has 1.5 Trillion in debt.
Or ask a saver/retiree, who is not getting a fair safe return. Balance is key and it comes with precision. more granular interest rate change can generate efficiency.