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Open Market Operations: Key Concepts
  • Temporary open market operations involve repurchase and reverse repurchase agreements that are designed to temporarily add or drain reserves available to the banking system.
  • Permanent open market operations involve the buying and selling of securities outright to permanently add or drain reserves available to the banking system.
  • The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.