Open Market Operations
Open Market Operations (OMO) refer to the buying and selling of government securities by a central bank, such as the Federal Reserve, to control the money supply and influence interest rates. When the central bank buys securities, it injects money into the economy, encouraging lending and spending. Conversely, selling securities withdraws money from circulation, which can help curb inflation.
These operations are a key tool for implementing monetary policy. By adjusting the amount of money in the economy, the central bank aims to achieve its goals of stable prices and maximum employment, impacting overall economic growth.