The Discount Rate
The Federal Reserve System also directly sets the "discount rate," the interest rate that banks pay to borrow directly from the Fed rather than other banks. However, banks usually prefer borrowing fed funds from other banks, even at a higher interest rate, rather than directly from the Fed, because that might suggest problems with the bank's credit-worthiness or solvency. Raising and lowering of the discount rate may signal weakness or health in the banking industry. This rate does not fluctuate.
Next: Controlling the Money Supply