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Board of Governors of the Federal Reserve System
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Federal Reserve Board of Governors

Open Market Operations


Open market operations (OMOs)--the purchase and sale of securities in the open market by a central bank--are a key tool used by the Federal Reserve in the implementation of monetary policy. The short-term objective for open market operations is specified by the Federal Open Market Committee (FOMC). Before the global financial crisis, the Federal Reserve used OMOs to adjust the supply of reserve balances so as to keep the federal funds rate--the interest rate at which depository institutions lend reserve balances to other depository institutions overnight--around the target established by the FOMC.

The Federal Reserve's approach to the implementation of monetary policy has evolved considerably since the financial crisis, and particularly so since late 2008 when the FOMC established a near-zero target range for the federal funds rate. From the end of 2008 through October 2014, the Federal Reserve greatly expanded its holding of longer-term securities through open market purchases with the goal of putting downward pressure on longer-term interest rates and thus supporting economic activity and job creation by making financial conditions more accommodative.

During the policy normalization process that commenced in December 2015, the Federal Reserve will use overnight reverse repurchase agreements (ON RRPs)--a type of OMO--as a supplementary policy tool, as necessary, to help control the federal funds rate and keep it in the target range set by the FOMC.

For additional information, see: http://www.federalreserve.gov/monetarypolicy/bst_openmarketops.htm

The Federal Reserve Bank of New York publishes a detailed explanation of OMOs each year in its Annual Report Leaving the Board. For a description of open market operations during the 1990s, see the article in the Federal Reserve Bulletin (102 KB PDF).

For additional information on how the Federal Reserve will use ON RRPs during the policy normalization process, see: http://www.federalreserve.gov/monetarypolicy/overnight-reverse-repurchase-agreements.htm

FOMC's target federal funds rate or range, change (basis points) and level

 

2015 | 2008 | 2007 | 2006 | 2005 |  2004 | 2003 | Historical Archive

 

2015

Date Increase Decrease Level (%)
December 17 25 0 0.25-0.50

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2008

Date Increase Decrease Level (%)
December 16 ... 75-100 0-0.25
October 29 ... 50 1.00
October 8 ... 50 1.50
April 30 ... 25 2.00
March 18 ... 75 2.25
January 30 ... 50 3.00
January 22 ... 75 3.50

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2007

Date Increase Decrease Level (%)
December 11 ... 25 4.25
October 31 ... 25 4.50
September 18 ... 50 4.75

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2006

Date Increase Decrease Level (%)
June 29 25 ... 5.25
May 10 25 ... 5.00
March 28 25 ... 4.75
January 31 25 ... 4.50

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2005

Date Increase Decrease Level (%)
December 13 25 ... 4.25
November 1 25 ... 4.00
September 20 25 ... 3.75
August 9 25 ... 3.50
June 30 25 ... 3.25
May 3 25 ... 3.00
March 22 25 ... 2.75
February 2 25 ... 2.50

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2004

Date Increase Decrease Level (%)
December 14 25 ... 2.25
November 10 25 ... 2.00
September 21 25 ... 1.75
August 10 25 ... 1.50
June 30 25 ... 1.25

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2003

Date Increase Decrease Level (%)
June 25 ... 25 1.00

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Basis points: 1/100 percentage point Return to Text

Last update: December 16, 2015