If reserves are above the minimum, the bank can loan the excess to a bank that is below minimum. The market for federal funds determines the federal funds rate. By controlling the discount rate, the Fed can influence the nation's economic cycles, to some extent. The Fed fights inflation by increasing these key interest rates. By raising the fed funds rate, the Fed decreases the amount of money available to the national banking system.
Banks tend to base the rates charged for business and consumer loans on their own cost of funds.
So an increase in the discount rate and fed funds rates will usually lead to banks increasing their lending rates. This makes borrowed money more expensive for businesses and consumers. By making borrowed money more expensive, the Fed hopes to slow inflation by slowing down the rate at which money is spent. By lowering these rates, the Fed makes more money available to the nation's banks. This leads to borrowed money becoming cheaper for consumers and businesses.