what is the key rate 
the key rate is the specific interest rate that determines bank lending rates and the cost of credit for borrowers the two key interest rates in the u s are the discount rate and the federal funds rate these are rates that are set either directly or indirectly by the federal reserve in order to influence lending and the supply of money and credit in the economy understanding the key ratethe key rate is the interest rate at which banks can borrow when they fall short of their required reserves they may borrow from other banks or directly from the federal reserve for a very short period of time the rate that banks can borrow from other banks at is called the federal funds rate the rate banks borrow from the federal reserve at is called the discount rate 