For all the readers who have seen a hordes of news about slashing of key interest rates (also known as federal funds rate) and discount rate by Federal Reserve Board, here is a brief difference explained on both of these rates in layman's language.
The federal funds rate or key interest rate is what banks charge each other for overnight loans and is the basis for everything from business loans to credit card charges.
The discount rate is what the Fed charges member institutions directly for short-term loans.
The federal funds rate or key interest rate is what banks charge each other for overnight loans and is the basis for everything from business loans to credit card charges.
The discount rate is what the Fed charges member institutions directly for short-term loans.
