Discount Rate
The term is mostly used to refer to the rate at which U.S. banks can borrow funds directly from the Federal Reserve. That is, the interest rate that the Fed charges a bank to borrow short-term funds.
The discount rate is one of the two interest rates set by the Fed, the other being the Federal funds rate. The Fed actually controls this rate directly, but this fact does not really help in policy implementation, since banks can also find such funds elsewhere.
