Which rate does the Fed actually set?
A) the Federal Funds rate
B) market interest rates
C) the discount rate
D) the prime rate

Question

Quizplus · Accepted Answer

The Fed actually sets the discount rate, which is the interest rate at which member banks can borrow short-term funds directly from the Federal Reserve. The other rates listed (Federal Funds rate, market interest rates, prime rate) are determined by market forces and influenced by the Fed's monetary policy decisions, but are not directly set by the Fed.

Which Rate Does the Fed Actually Set