Open Market Operations - OMO
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Definition of 'Open Market Operations - OMO'
The buying and selling of government securities in the open market in order to expand or contract the amount of money in the banking system. Purchases inject money into the banking system and stimulate growth while sales of securities do the opposite.
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Investopedia explains 'Open Market Operations - OMO'
Open market operations are the principal tools of monetary policy. (The discount rate and reserve requirements are also used.) The U.S. Federal Reserve's goal in using this technique is to adjust the federal funds rate--the rate at which banks borrow reserves from each other.
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Learn about the tools the Fed uses to influence interest rates and general economic conditions.
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Discover what tools the Fed uses to influence the amount of money and credit in the U.S. economy.
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Find out how the Fed manages bank reserves and this contributes to a stable economy.
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