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:
“We must not leap to the fatalistic conclusion that we are stuck with the conceptual scheme that we grew up in. We can change it, bit by bit, plank by plank, though meanwhile there is nothing to carry us along but the evolving conceptual scheme itself. The philosopher’s task was well compared by Neurath to that of a mariner who must rebuild his ship on the open sea.”
—Willard Van Orman Quine (b. 1908)
“the old palaces, the wallets of the tourists,
the Common Market or the smart cafés,
the boulevards in the graceful evening,
the cliff-hangers, the scientists,
and the little shops raising their prices
mean nothing to me.”
—Anne Sexton (1928–1974)
“Waiting for the race to become official, he began to feel as if he had as much effect on the final outcome of the operation as a single piece of a jumbo jigsaw puzzle has to its predetermined final design. Only the addition of the missing fragments of the puzzle would reveal if the picture was as he guessed it would be.”
—Stanley Kubrick (b. 1928)