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discount rate
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   Also found in: Financial, Encyclopedia, Wikipedia 0.03 sec.

discount rate

The rate that banks are charged to borrow money from the Federal Reserve Bank. One of the tools of monetary policy, the discount rate allows the Federal Reserve System to govern consumer interest rates and the amount of money in circulation.


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For example if you take out a one-year loan of $100 at a discount interest rate of 10%, you would receive $90 at the outset.
 
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