Open Market Operations are actions taken by the Federal Reserve to attempt to control or otherwise influence some aspect of the economy. Open market operations generally refer to the operations by the central bank that either increase or decrease the money supply. This is most commonly done through the re-purchase, or sale of government securities or other financial instruments. Other targets like exchange rates and interest rates are used to help guide open market operations.
Open market operations can be used by the central bank to help control macroeconomic trends like inflation, or by a currency board to attempt to maintain a fixed exchange rate between two currencies.
