United States Federal Reserve System

Factors that influence the Federal Reserve in adjusting the discount rate

Interest rates are charged for loans to commercial banks. In accordance to the rules and regulations of the Federal Reserve, this is a principle that can be used as a means of controlling the money supply. An increase in the level of the money supply is achieved when the Federal lowers the rates of discount. A decrease for money supplied is achieved by raising the amounts of loans issued by the Federal Reserve. The board of governors is subject to scrutiny and approval of the levels of discount rates that are set by the Federal Reserve. The Federal Reserve does not work on its own. It operates under strict guidance from the board of directors within the organization. The decisions made by the board of governors through the Federal Reserve are directed at maintaining...
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