Techniques of Open Market Operations

Depending on the reserve situation, the Federal Reserve ap­proaches open market operations in one of two ways. When fore­casts of the factors that influence reserves indicate that the supply of reserves will probably continue to need adjustment, the Federal Reserve may make outright purchases or sales of securities. If the need is to withdraw reserves, the Federal Reserve may also redeem maturing securities held in its portfolio. (When the Fed­eral Reserve redeems the securities, the Treasury takes funds out of its account to pay the Federal Reserve, leaving fewer reserves in the depository system.) In general, it conducts outright transac­tions (sales, purchases, and redemptions) only a few times each year, to meet longer-term reserve needs.

When projections indicate only a temporary need to alter reserves, either because the technical factor affecting reserves is expected to be reversed or off­set or because the near-term outlook for reserves is uncertain, the Federal Reserve may engage in transactions that only temporarily affect the sup­ply of reserves—repurchase agreements, in the case of temporary additions of reserves, and matched sale-purchase transactions, in the case of temporary drains of reserves. These temporary transactions, which are designed to reduce fluctuations in the overall supply of reserves by offsetting the short-term effects of technical factors, are used much more frequently than are outright transactions. Market participants monitor these operations very closely for signs of any change in the underlying thrust of monetary policy.

Дата добавления: 2015-07-20