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Interest rate charged by a central bank for loans of reserve funds to commercial banks and other financial intermediaries. The discount rate is one important indicator of the condition of monetary policy in an economy. Because raising or lowering the discount rate alters the rates that commercial banks charge on loans, adjustment of the discount rate is used as a tool to combat recession and inflation.
Variants of DISCOUNT RATE
discount rate or bank rate
This entry comes from Encyclopædia Britannica Concise. For the full entry on discount rate, visit Britannica.com.