Open Market Operations

Open market operations are a central bank's day-to-day purchases and sales of securities in the money market, used to keep the short-term interest rate at or near the level policy has set. Buying securities adds reserves to the banking system and pushes the rate down; selling them, or letting repurchase agreements mature, drains reserves and pushes it up. These are implementation rather than policy: the rate decision is the announcement, and open market operations are how it is made real day by day. They rarely move currencies on their own, because they are expected — the exceptions are operations large enough to signal a change in stance, or ones that reveal stress in short-term funding markets.