Discount Rate, Prime Rate, and the Federal Funds Rate  Ever
wonder how the economy goes ’round? Or how inflation is
controlled and recessions are avoided?  A lot of it has to do
with the Federal Reserve and its tight control of the money
supply. So let’s take a closer look to better understand how it
all works. And how it affects mortgage rates.  (Latest rate
movement 2/18/10, last updated 11/4/13)  Discount Rate
(Currently 0.75%)  The “discount rate” is the interest rate the
Federal Reserve sets and offers to member banks and thrifts that
need to borrow money in order to prevent their reserves from
dipping below the legally required minimum.  This situation can
arise if a bank lends too much and/or has too many withdrawals
on a given day.  Money is borrowed overnight via the “discount
window.”  As a rule of thumb, the higher the discount rate, the
higher mortgage interest rates will be.  The two correlate quite
well, though not as strongly as the 10-year bond yield due to
its longer maturity.  When the disco