- 1. the rate of interest charged in discounting commercial paper.2. the interest rate charged by Federal Reserve Banks on loans to their member banks, usually against government securities as collateral.3. the rediscount rate.[1925-30]
* * *or bank rateInterest rate charged by a central bank for loans of reserve funds to commercial banks and other financial intermediaries.The discount rate is one important indicator of the condition of monetary policy in an economy. Because raising or lowering the discount rate alters the rates that commercial banks charge on loans, adjustment of the discount rate is used as a tool to combat recession and inflation.
* * *▪ financeinterest rate charged by a central bank for loans of reserve funds to commercial banks and other financial intermediaries. This charge originally was an actual discount (an interest charge held out from the amount loaned), but the rate is now a true interest charge, even though the term discount rate is still used.The discount rate serves as an important indicator of the condition of credit in an economy. Because raising or lowering the discount rate alters the banks' borrowing costs and hence the rates that they charge on loans, adjustment of the discount rate is considered a tool to combat recession or inflation. The discount rate also is used to deal with balance-of-payments deficits—that is, to regulate international movements of capital.
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Look at other dictionaries:
discount rate — n 1: the interest on an annual basis deducted in advance on a loan 2: the interest levied by the Federal Reserve for advances and rediscounts Merriam Webster’s Dictionary of Law. Merriam Webster. 1996 … Law dictionary
discount rate — n. 1. DISCOUNT (n. 3) 2. the rate at which the Federal Reserve Banks discount or rediscount securities offered by member banks … English World dictionary
discount rate — discount .rate n [C usually singular] the interest rate that a country s ↑central bank charges to other banks … Dictionary of contemporary English
discount rate — discount ,rate noun count BUSINESS the rate of interest that The Federal Reserve charges another bank that borrows from it … Usage of the words and phrases in modern English
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Discount rate — 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 Fed views it as a privilege to be used to meet … Financial and business terms
Discount Rate — 1. The interest rate that an eligible depository institution is charged to borrow short term funds directly from a Federal Reserve Bank. Different types of loans are available from Federal Reserve Banks and each corresponding type of credit has… … Investment dictionary
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discount rate — 1) The hurdle rate of interest or cost of capital rate applied to the discount factors used in a discounted cash flow appraisal calculation. The discount rate may be based on the cost of capital rate adjusted by a risk factor based on the risk… … Big dictionary of business and management