[radioone]

“I thought the “markets” determined interest rates”

Not necessarily. The Federal Reserve Discount Rate has a LOT to do with it.

Here are a couple of articles: How the Fed Affects Interest Rates

http://www.life123.com/career-money/real-estate/mortgages/how-the-fed-affects-interest-rates.shtml

http://beginnersinvest.about.com/od/banking/a/aa062405.htm

[Texas Fossil]

Yes, I did know the Fed Discount Rate does affect interest rates.

But the discount rate is largely symbolic. It is the rate for very short term transfer of money. 1-3 weeks, anything longer and the bank will get a call wanting to know what they are doing.

But this does have a steering affect on bank lending.