Question

compare and contrast the federal funds rate the discount rate and the prime rate in 2-3 sentences include percentages

Answer 1

The federal funds rate, currently around 5.25% to 5.50%, is the interest rate at which banks lend reserves to each other overnight, serving as a critical benchmark for monetary policy. The discount rate, typically set about 0.25% to 0.50% higher than the federal funds rate, is the interest rate the Federal Reserve charges banks for short-term loans from its discount window. In contrast, the prime rate, which is generally about 3% higher than the federal funds rate (currently around 8.25% to 8.50%), is the interest rate banks offer their most creditworthy customers, impacting borrowing costs for consumers and businesses.