Open Mouth Operations

Open Mouth Operations
Open mouthed operations are speculative measures taken by the Federal Reserve to influence interest rates and inflation through the sale or purchase of U.S Treasury bonds. Open mouth operations can be thought of as the central bank announcements that let markets know where the central banks prefer interest rates to be. The potential use of open market operations by the central bank to attain this target interest rate normally causes the market to react and adjust interest rates without the central bank actually having to take action.

The main difference between open mouth operations and open market operations is that the former deals with the intent while the latter refers to the action. Selling U.S Treasury Bonds decreases the cash deposits held in banks, thus reducing the money supply, and increases interest rates. Increased interest rates discourage banks from extending credit, temporarily slowing down economic progress.


Investment dictionary. . 2012.

Игры ⚽ Нужна курсовая?

Look at other dictionaries:

  • open — [[t]o͟ʊpən[/t]] ♦ opens, opening, opened 1) V ERG If you open something such as a door, window, or lid, or if it opens, its position is changed so that it no longer covers a hole or gap. [V n] He opened the window and looked out... The church… …   English dictionary

  • Operations plan — For other uses, see Military operation plan. Plan de Operaciones First page of the Operations plan. Created 1810 …   Wikipedia

  • open — /ˈoʊpən / (say ohpuhn) adjective 1. not shut, as a door, gate, etc. 2. not closed, covered, or shut up, as a house, box, drawer, etc. 3. not enclosed as by barriers, as a space. 4. that may be entered, used, shared, competed for, etc., by all: an …  

  • Monetary policy — Part of a series on Government Public finance File:Governmentbhj,i,gu Vedder Highsmith detail 1.jpeg …   Wikipedia

  • Money creation — Banking A series on Financial services …   Wikipedia

  • United States dollar — USD redirects here. For other uses, see USD (disambiguation). United States dollar …   Wikipedia

  • Moral suasion — (a phrase from the Latin words “moral” and “suasio” which denote respectively “conduct or character that is right and virtuous”[1] and “to present in a pleasing manner”[2] sometimes known as Jawboning[3]), is defined in the economic sphere as… …   Wikipedia

  • ГРОМОГЛАСНЫЕ ОПЕРАЦИИ — (open mouth operations) Случаи, когда Федеральная резервная система (Federal Reserve System) США пытается проводить денежно кредитную/монетарную политику (monetary policy) путем правительственных заявлений. Финансы. Толковый словарь. 2 е изд. М …   Финансовый словарь

  • громогласные операции — Случаи, когда Федеральная резервная система (Federal Reserve System) США пытается проводить денежно кредитную/монетарную политику (Monetary policy) путем правительственных заявлений. [http://www.vocable.ru/dictionary/533/symbol/97] Тематики… …   Справочник технического переводчика

  • North-West Frontier (military history) — The North West Frontier was the most difficult area, from a military point of view, of the former British India in the Indian sub continent. It remains the frontier of present day Pakistan, extending from the Pamir Knot in the north to the Koh i… …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”