One of the mysteries of the English language finally explained.
1The minimum interest rate set by the Federal Reserve for lending to other banks.
- ‘It has been argued that, for open market transactions to become more efficient, the discount rate should keep the banks from perpetual borrowing, which would disrupt the market's money supply and the central bank's monetary policy.’
- ‘A key vote on a proposed increase in the discount rate occurred at a Federal Reserve Board meeting on December 3.’
- ‘The Dow has rallied in the last two weeks following the last cut in the discount rate by the Federal Reserve.’
- ‘We have also shown that the present value of the debt ratio grows or diminishes according to the difference between the real economic growth rate and the real interest rate and the discount rate.’
- ‘The discount rate is essentially the interest rate that banks and other depository institutions are charged to borrow from the Federal Reserve.’
2A rate used for discounting bills of exchange.
- ‘In this economic environment the average discount rate on Treasury bills is 4.95 per cent.’
- ‘Discounting means selling the bill for cash at a discount, which depends on the discount rate and the number of days the bill has to run to maturity.’
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