Can someone PLEASE help me understand all the different types of interest rates and how they affect eachother?
My boss keeps throwing different rates at me including Policy Rate, Discount Rate, Prime Rate, Federal Funds Rate, Interest rate. Which one is the main rate that everyone talks about that's in the news and the fed is increasing 75 basis points? What do the others mean?
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The one everyone talks about is the Federal Funds rate. It's the rate at which banks can lend to each other. This is important because if it costs more for banks to borrow money, that cost gets pushed onto the consumer who wants to borrow from the bank which results in an domino effect of other rates rising like mortgage rates, auto loan rates, private student loan rates, etc...
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