The primary objective of open market operations by the federal reserve bank is to grow or shrink the money supply.
Open market operations (OMO) refers to the Federal Reserve (the Fed) practice of buying and selling U.S. Treasury securities, along with other securities, on the open market in order to regulate the supply of money that is on reserve in U.S. banks. The Fed purchases Treasury securities to increase the supply of money and sells them to reduce long-term interest rates.
The objective of OMOs is to adjust the level of reserve balances to manipulate the short-term interest rates and that affect other interest rates. The Federal Reserve conducts open market operations to achieve the desired target federal funds rate by buying or selling government bonds from or to commercial banks.
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