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:
“Wild Bill was indulging in his favorite pastime of a friendly game of cards in the old No. 10 saloon. For the second time in his career, he was sitting with his back to an open door. Jack McCall walked in, shot him through the back of the head, and rushed from the place, only to be captured shortly afterward. Wild Bill’s dead hand held aces and eights, and from that time on this has been known in the West as “the dead man’s hand.””
—State of South Dakota, U.S. public relief program (1935-1943)
“Forbede us thing, and that desiren we;
Preesse on us faste, and thanne wol we flee.
With daunger oute we al oure chaffare:
Greet prees at market maketh dere ware,
And too greet chepe is holden at litel pris.”
—Geoffrey Chaucer (1340?–1400)
“It is critical vision alone which can mitigate the unimpeded operation of the automatic.”
—Marshall McLuhan (1911–1980)