True or False Statement, and explain about the discount rate and federal funds rate?

';A decrease in the discount rate will always cause a decrease in the federal reserve funds rate.';True or False Statement, and explain about the discount rate and federal funds rate?
False





The Fed Funds rate is the rate at which the Federal Reserve ';forces'; interest rates to exist at in the broad economy of bank lending.





The Fed's Discount Rate is the rate at which its costs to borrow money directly from the Federal Reserve. Typically the Discount Rate is higher than the Funds Rate to encourage borrowing from member banks and not the Federal Reserve itself.