Discount Rate
a.k.a. Primary credit rate
The interest rate the Federal Reserve charges banks that borrow directly from it through the discount window.
In plain English
The interest rate the Federal Reserve charges banks that borrow directly from it through the discount window.
The discount rate is what banks pay to borrow overnight from the Fed through the discount window. It is set above the federal funds rate target, so banks normally borrow from each other first.
In finance more broadly, 'discount rate' also means the rate used to convert future cash flows into today's value.
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