discount rate

American  

noun

Finance.

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.

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discount rate Cultural  

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

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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.

Etymology

Origin of discount rate

First recorded in 1925–30

Compare meaning

How does discount-rate compare to similar and commonly confused words? Explore the most common comparisons:

• discount rate vs. interest rate

Example Sentences

See Examples For:

discount rate

Taiwan’s central bank kept its benchmark discount rate at 2.000% for a ninth consecutive quarter, citing moderate inflation pressure after an interim U.S.-Iran peace deal.

From The Wall Street Journal ● Jun. 18, 2026

Next, lower rates increase the net present value of companies with distant earnings, by reducing the discount rate in valuation models.

From MarketWatch ● Nov. 3, 2025

Robo-taxis and robots are worth more than they used to be, and Murphy also used a lower discount rate to value shares.

From Barron's ● Oct. 29, 2025

That changed on Black Friday, when the discount rate began to peak at 30% in the U.S., he said.

From Seattle Times ● Nov. 26, 2023

I registered as a member of FCIC, attaining a handy discount rate, then went in search of the Feds.

From The Hacker Crackdown, law and disorder on the electronic frontier by Sterling, Bruce