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discount rate definition - finance
The interest rate charged to commercial banks and other depository institutions on loans they receive from the discount window, the Federal Reserve BankÂ’s lending facility. Typically, these loans are given only to meet a bankÂ’s short-term need, such as overnight or for the weekend. Banks must use all other sources of funds before applying for a Federal Reserve loan, which is given at below-market rates.

Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.

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