Monetary Policy

Monetary Policy refers to the control and supply of money. Central banks such as the Fed, the ECB, and the Bank of England control this in its respective nations. The level of control includes the ability to create money and purchase financial assets, as well as setting interest rates.

Discount Rate Definition

Discount Rate in Economics

The discount rate is the interest rate by which the central bank charges commercial banks to borrow money or cover short-term liabilities. In other words, the central bank lends money to the likes of Goldman Sachs, and in turn, they pay interest of that loan. The interest paid is known as the discount rate.