BANKING AFFAIRS

Detailed explanation-1: -Open market operations. Buying and selling of government securities by the central bank from or to the public and banks are known as open market operations. It is an instrument of credit control which was used later when the bank rate policy was found ineffective.

Detailed explanation-2: -In open market operations, the Federal Reserve buys or sells securities on the open market to raise or lower interest rates. They are one of the tools that the Fed has at its disposal to boost or slow down the country’s economic activity.

Detailed explanation-3: -In macroeconomics, an open market operation (OMO) is an activity by a central bank to give (or take) liquidity in its currency to (or from) a bank or a group of banks.

Detailed explanation-4: -Open market operations (OMOs)–the purchase and sale of securities in the open market by a central bank–are a key tool used by the Federal Reserve in the implementation of monetary policy. The short-term objective for open market operations is specified by the Federal Open Market Committee (FOMC).