Final answer:
The interest rate that banks charge each other for overnight loans is called the federal funds rate, different from the prime rate, discount rate, or LIBOR rate.
Step-by-step explanation:
The interest rate that banks charge each other is known as the federal funds rate. This rate is the interest at which one bank lends funds to another bank overnight. It is critical to distinguish between different types of interest rates used in the banking sector. While the prime rate is the rate that banks charge their most creditworthy customers, the federal funds rate specifically refers to the interbank lending rate. Additionally, the discount rate is the rate the Federal Reserve charges banks for short-term loans from its discount window, and the LIBOR rate, or London Interbank Offered Rate, is another rate used for interbank lending, commonly in the international context.