The discount rate is the rate at which banks pay when they go to the discount window to borrow money. This is simply set and posted by the Fed. Borrowing at the

The discount rate is the rate at which banks pay when they go to the discount window to borrow money. This is simply set and posted by the Fed. Borrowing at the discount window is a backstop for banks and not a typical part of their operations and not the usual lever of monetary policy. The Fed Funds rate is the rate which banks will lend to each other overnight on the Fedwire. This is the rate the Fed targets in monetary policy. This target rate is achieved by the Fed conducting open market operations and doing repos or reverse repos with primary dealers. Open market operations are literally the Fed going into the market and literally entering repurchase agreements for Treasury securities. I understand that they are really buying and selling money, not the securities.