Great news! The Fed just announced that the discount rate will rise by as much as 1% over the next three months. This will make it easier for Ben, the owner of a laser engraving business, to borrow money for that new piece of equipment he needs.

Question

Quizplus · Accepted Answer

The discount rate is the interest rate at which banks can borrow money directly from the Federal Reserve. A rise in the discount rate typically leads to other interest rates increasing as well, making it more expensive for businesses like Ben's to borrow money. Therefore, it would actually be harder for Ben to borrow money for new equipment with a higher discount rate.

Great News! the Fed Just Announced That the Discount Rate