discount rate

  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.

  1. the rediscount rate.

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Origin of discount rate

First recorded in 1925–30

Words Nearby discount rate Unabridged Based on the Random House Unabridged Dictionary, © Random House, Inc. 2024

How to use discount rate in a sentence

  • The "call rate" is commonly well below the regular "discount rate," or rate for thirty-day, sixty-day, or ninety-day paper.

    The Value of Money | Benjamin M. Anderson, Jr.
  • This explains why the discount rate on acceptances ranges so low.

    Readings in Money and Banking | Chester Arthur Phillips

Cultural definitions for discount rate

discount rate

The rate of interest charged by the Federal Reserve System on loans it makes to the banking system.

Notes for discount rate

Because the Federal Reserve System lends money to the banking industry, one mechanism it has for regulating interest rates is to vary the discount rate — that is, to make the money that banks borrow relatively more or less expensive. It is likely to lower the discount rate during economic downturns to stimulate investment and raise it during upswings to check inflation.

The New Dictionary of Cultural Literacy, Third Edition Copyright © 2005 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.