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Information > Financial Terms > This page Floating Discount Rate A central bank's DISCOUNT RATE which instead of being fixed at a particular level by the central bank in accordance with its prevailing MONETARY POLICY, as one of the tools of control of such policy, varies pursuant to the changes in a key MONEY MARKET rate, such as that on offerings of Treasury bills. the discount rate of the BANK OF CANADA from 1956 to 1962 floated 0.25% above the Treasury bill rate. An alleged advantage of a floating discount rate of the central bank is the fact that it keeps in line with prevailing money rates, instead of being either above or below the market. Back to Information |