The short-term rate at which banks lend to each other is called the ________.

Question

Quizplus · Accepted Answer

The Fed Funds Rate is the short-term interest rate at which depository institutions (such as banks) lend and borrow money from each other overnight to meet reserve requirements set by the Federal Reserve. The other options, such as the Discount Rate, Federal Reserve Rate, Federal Loan Rate, and Reserve Loan Rate, are either not used to describe interbank lending or are incorrect terms.

The Short-Term Rate at Which Banks Lend to Each Other