# Open Market Operations **Open market operations** are the [[Federal Reserve]]'s purchases and sales of securities, overwhelmingly Treasuries, executed by the Open Market Desk at the Federal Reserve Bank of New York under a directive voted by the [[Federal Open Market Committee]]. They are how the size and composition of the central bank's balance sheet actually change. ## Outright and temporary The Desk works in two modes: - **Outright purchases and sales** permanently add or remove reserves. Buying a Treasury bill from a dealer credits the dealer's bank with new reserves; selling one drains them. - **Temporary operations** are repurchase agreements (repos), which add reserves for a set term against collateral, and reverse repos, which drain them. The [[Standing Repo Facility]] and the [[Overnight Reverse Repo Facility]] are the standing, always-available versions. ## The function changed in 2008 In the **scarce-reserves** system before 2008, banks held few excess reserves, and the Desk bought and sold small amounts every day to keep the [[Federal Funds Rate]] near its target. Reserves were the lever. Under the **[[Ample Reserves]]** framework adopted after 2008 and made permanent in 2019, the policy rate is set by administered rates instead: the interest the Fed pays on reserves and the reverse-repo rate. Open market operations now do two different jobs: 1. **Plumbing:** keeping the supply of reserves ample as the economy and the Treasury's cash account grow. 2. **Policy at scale:** [[Quantitative Easing]] and [[Quantitative Tightening]], large purchases or runoff decided by the FOMC to move long-term rates. ## Plumbing is not stimulus The distinction confuses markets and politicians alike. Balance-sheet runoff ended on December 1, 2025. On **December 10, 2025** the FOMC announced reserve-management purchases of Treasury bills, about **$40 billion a month** at the start, beginning December 12. The balance sheet began growing again, and some commentators called it a return to QE. It is not: bill purchases to hold reserves steady change the size of the balance sheet without the duration-removal that gives QE its effect on long rates. The test is *what* the Fed buys and *why*, not whether the balance sheet is growing. ## See also - [[Monetary Policy Transmission Flow]] · [[Federal Open Market Committee]] - [[Ample Reserves]] · [[Quantitative Easing]] · [[Quantitative Tightening]] - [[Standing Repo Facility]] · [[Overnight Reverse Repo Facility]] · [[Federal Funds Rate]]