Open Market Operations
The Federal Reserves purchase or sale of US Treasury securities (and, since 2008, agency mortgage-backed securities) in the open market. Pre-2008 OMO was the primary policy tool because reserves were scarce -- adding reserves lowered short rates and removing reserves raised them. Post-2008 in the ample-reserves regime, OMO instead changes the SIZE of the Fed balance sheet (quantitative easing / quantitative tightening) without driving the day-to-day policy rate, which is now set by administered rates (IORB and ON-RRP).
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Related terms
10Y Treasury · Altman Z-Score · Asset Sensitivity · Basel III · Bond ETF · Bretton Woods
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