Open Market Operations

•Open Market Operations (OMO) is one of the quantitative monetary policy tools which is employed by the central bank of a country to control the money supply in the economy.
oOther monetary policy tools are such as repo rate, cash reserve ratio and statutory liquidity ratio, etc.
•OMOs are conducted by the RBI by way of sale or purchase of government securities (g-secs) to adjust money supply conditions.
oRBI carries out the OMO through commercial banks and does not directly deal with the public.
•The central bank sells g-secs to remove liquidity from the system and buys back g-secs to infuse liquidity intothe system.