Open Market Operations vs Quantitative Easing

Open market operations are the central bank's buying and selling of government bonds to change the money supply.

Buying bonds injects reserves and increases the money supply (expansionary); selling bonds removes reserves and decreases it (contractionary). They are the Federal Reserve's most-used monetary policy tool. They directly affect bank reserves and short-term interest rates.

Quantitative easing is a central bank policy of buying large amounts of long-term assets to inject money and lower interest rates when short-term rates are near zero.

It is used when conventional rate cuts are exhausted (rates already near zero). By buying bonds and other assets, the central bank raises their prices, lowers long-term yields, and expands the money supply to stimulate borrowing and spending.