Final answer:
The term that refers to the interest that is charged when banks borrow from the Federal Reserve is the discount rate.
Step-by-step explanation:
The term that refers to the interest that is charged when banks borrow from the Federal Reserve is discount rate.
The discount rate is the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility--the discount window. It is determined by each Reserve Bank's board of directors, subject to the review and determination of the Board of Governors of the Federal Reserve System.
For example, the Federal Reserve offers three discount window programs to depository institutions: primary credit, secondary credit, and seasonal credit. Each program has its own interest rate, with the primary credit rate being set above the usual level of short-term market interest rates.