The National Directory of Certified Public Accountants

Ask A CPA - Investments & Financial Planning

What Is The Federal Reserve Discount Rate ?

The Discount rate is the interest rate that the Federal Reserve charges a bank to borrow funds when a bank is temporarily short of funds. Collateral is necessary to borrow, and such borrowing is quite limited because the Federal reserve views it as a privilege to be used to meet short term liquidity needs, and not a device to increase earnings.

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