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Discount Air Travel: discount air travel Rate. The rate that banks pay borrow from the Federal Reserve is called discount air travel rate or rediscount air travel rate. This rate, though set individually by each of the 12 Fede Reserve banks, is identical in all Federal Resa districts most of the time.
Despite popular opinion to the contrary, i discount air travel rate is not a major determinant whether banks borrow from the Federal Resei or not. Because the discount air travel rate is invarial well below what banks in turn charge the pub for money, banks would be delighted to obta new funds by discount air traveling when credit is tig and they have no more lendable funds.Bank lending rates to the public general rise when the discount air travel rate goes up, but it i-because the banks must pay more for ir.... Rather it is because they expect that the Fj Reserve soon will make money scarce, they raise business loan rates as a way cate available funds. But a discount air travel rate ri: not automatically mean bank lending ral rise, especially if bank loan demands are A decline in the discount air travel rate conversely that the Federal Reserve probably will si credit through open-market operations.
Howevi discount air traveling at the Federal Reserve is reserved f emergency needs, such as an unexpected increa in the public's desire for cash or an unexpedi adverse clearance (when more money flows fra the specific bank into others than flows fra others to it). Thus, despite the low level of ti U. S. discount air travel rate relative to other interest rate bank borrowing is not motivated or deter changes in the discount air travel rate. |
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