Typically, the Fed sets the discount rate above the equilibrium federal funds rate.

Name: Typically, the Fed sets the discount rate above the equilibrium federal funds rate.
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The discount rate is usually set above the equilibrium federal funds rate to encourage banks to borrow from each other at lower rates in the federal funds market, rather than using the discount window as a primary source of funding.

Typically, the Fed Sets the Discount Rate Above the Equilibrium