The Discount Rate is the rate at which member banks may borrow directly from a Federal Reserve Bank.
The Federal Funds Rate. The interest rate that banks charge each other for the use of Federal funds. It changes daily and is a sensitive indicator of general interest rate trends.
The Fed can't directly affect the Federal Funds Rate, it's their target rate. However, they effectively control it in the way they buy and sell Treasuries to banks. This is the rate that most directly affects consumer credit.
Borrowing directly from the Fed (Discount Rate) adds liquidity. Lowering the Federal Funds Rate may lower the cost of short-term loans between banks.
