An open market operation (also known as OMO) is an activity by a central bank to buy or sell government bonds on the open market. A central bank uses them as the primary means of implementing monetary policy. The usual aim of open market operations is to control the short term interest rate and the supply of base money in an economy, and thus indirectly control the total money supply. This involves meeting the demand of base money at the target interest rate by buying and selling government securities, or other financial instruments. Monetary targets, such as inflation, interest rates, or exchange rates, are used to guide this implementation.
Read more about Open Market Operation: Process, Possible Targets
Famous quotes containing the words open, market and/or operation:
“Luxury, then is a way of
being ignorant, comfortably
An approach to the open market
of least information.”
—Imamu Amiri Baraka (b. 1934)
“Ae market night,
Tam had got planted unco right,
Fast by an ingle, bleezing finely,
Wi’ reaming swats that drank divinely;”
—Robert Burns (1759–1796)
“An absolute can only be given in an intuition, while all the rest has to do with analysis. We call intuition here the sympathy by which one is transported into the interior of an object in order to coincide with what there is unique and consequently inexpressible in it. Analysis, on the contrary, is the operation which reduces the object to elements already known.”
—Henri Bergson (1859–1941)