The reserve rate, in terms of the U.S. economy and the Federal Reserve, refers to two distinct rates controlled by the Reserve in order to control the money supply of the economy:

The required reserve rate is the percentage of assets that a bank is required to hold on the premises. In order to generate money, banks will loan out money they are not required to hold, which in turn increases the money supply due to new business ventures, added jobs, et cetera. If the Fed chooses to raise this rate, less money is available for loaning, tightening the money supply, which can help fight inflation. Conversely, if the Fed lowers this rate, more money is available for loan, loosening the money supply, which can help fight economic stagnancy and unemployment.

The discount rate is the rate at which Federal Reserve banks loan money out to smaller banks. Like the required reserve rate, lowering this percentage increases the money supply to banks, which in turn increases money available for small business and personal loans. Raising the percentage tightens the money supply, causing loans to dry up.

The Federal Reserve Board (http://www.federalreserve.gov) meets roughly once every two weeks to determine rates, as well as other fiscal policies, such as whether to buy or sell securities and whether to literally increase the money supply through printing more money. Typically, the board will move the discount rate one quarter of one point in a particular direction if it feels a change is in order. Occasionally fighting spiraling inflation or unemployment the feds will move the discount rate by 1/2 point. These are fairly common moves, occurring at least six times a year, and more in times of recession or boom.

On the other hand, the required reserve rate has only changed twice in the past twenty five years, because its change has a much more drastic effect on the economy, and is harder to control. Also, reserve rates ensure that banks have enough money to cover their FDIC obligations for investors demanding deposits up to $100,000. Moving this rate is tantamount to an economic crisis. For context, the last time the reserve rates were set was in 1990, when America's economy was at its worst position since 1977 - when the reserve rates were also adjusted for the economic downfall.