Fed Makes Temporary Cut to Discount Rate

The Federal Reserve temporarily cut the discount rate by 0.50% today from 6.25% to 5.75%. The discount rate is the interest rate banks must pay for loans directly from the Fed. The central bank's target for the fed funds rate, the rate charged between banks for overnight loans, was left unchanged at 5.25%.

The fed funds rate is actually determined by the needs of the banks which are required to maintain a certain level of reserves on a daily basis. But the Federal Reserve adjusts the level to keep it near the target rate by injecting or withdrawing funds in the monetary system by selling or buying securities (usually Treasuries or agency debt).
(Federal Open Market Operations)

It should be noted that recent short-term injections of cash by the Fed into the banking system have reduced the cost of borrowing money for the time being. Yesterday's effective fed funds rate was 4.90%. In addition to the cut in the discount rate, the Fed made another short-term cash injection of $6 billion this morning.
(DISCOUNT RATE STATEMENT)