What is the primary purpose of open market operations?

The primary purpose of open market operations is to influence the money supply and interest rates. This is conducted by a country's central bank, which buys and sells government securities in the open market. When the central bank purchases securities, it injects liquidity into the banking system, leading to an increase in the money supply. Conversely, when it sells securities, it absorbs liquidity, reducing the money supply. This mechanism allows the central bank to manage macroeconomic stability, control inflation, and affect overall economic growth by adjusting interest rates, thereby influencing borrowing and spending in the economy.

The regulation of the stock market, credit score determination, and investment fund management are distinct activities that do not capture the core intent of open market operations, which is fundamentally about managing monetary policy.