Open Market Operations
a.k.a. OMO, OMOs
A central bank buying or selling government bonds in the market to steer short-term interest rates and…
In plain English
A central bank buying or selling government bonds in the market to steer short-term interest rates and liquidity.
Open market operations are the central bank's day-to-day plumbing work. To pump money into the banking system, it buys bonds from banks and pays with fresh reserves. To drain money out, it sells bonds or uses repos and reverse repos to borrow cash back.
These operations keep short-term market rates close to the target the central bank has set. In the US they are run by the New York Fed on behalf of the FOMC, which is literally named after them.
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