The interest rate the Fed charges banks borrowing from the Fed is theA) federal funds rate.B) Treasury bill rate.C) discount rate.D) prime rate.

To determine the correct answer, let's analyze the options provided:

1. Federal Funds Rate: This is the interest rate at which banks lend reserve balances to other depository institutions overnight. It is not charged directly by the Federal Reserve.

2. Treasury Bill Rate: This rate pertains to short-term government securities and does not reflect the rate at which the Fed lends to banks.

3. Discount Rate: This is the interest rate the Federal Reserve charges commercial banks for short-term loans. It is the correct term used when referring to the borrowing rate set by the Fed.

4. Prime Rate: This is the interest rate that commercial banks charge their most creditworthy customers, which is influenced but not directly determined by the Fed.

Conclusion

Based on the analysis above, the interest rate the Fed charges banks borrowing from the Fed is the C) discount rate.