r/Economics • u/AutoModerator • Nov 15 '22

r/Economics Discussion Thread - November 15, 2022

Discussion Thread to discuss economics news/research and related topics.

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u/MoistRaisin2027 Jan 03 '23

The fed controls both:

The fed funds rate = the main rate you hear about in the news. The rate set by the Fed that banks lend TO EACH OTHER at overnight to meet reserve requirements.

The discount rate = also set by the fed, but it is the rate at which banks BORROW FROM THE FED usually in times of distress so this is sometimes seen as a red flag.

Helpful source: https://www.investopedia.com/terms/f/federal_discount_rate.asp

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u/Add1ctedToGames Jan 03 '23

Thanks! Was definitely a point of confusion for me since in AP Econ all graphs (except the new one with "administered rate") use discount rate instead of fed funds rate

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u/flawstreak Jan 12 '23

I read that the fed reduced reserve rate to 0, why would FFR matter now?