The Fed Rate is the rate at which they borrow money.
they Then lend it out to businesses, and you and me at a much higher rate.
they only lose money when we don't borrow or they don't want to loan out money. Uncertainty/risk can cause that, and the uncertainty is what the Fed is trying to "fix".
Keep in mind, the above is a pretty gross over simplification of the situation but it should give you some understanding.