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Hemmati: OMO Pivotal to Stem Inflation

Hemmati: OMO Pivotal to Stem Inflation Hemmati: OMO Pivotal to Stem Inflation

The governor of the Central Bank of Iran says the main function of the open market operation is to help fight  inflation by regulating short-term interest rates in the interbank market. 
In an Instagram post Thursday, Abdolnasser Hemmati said the soon-to-be implemented plan is key in that [ absence of OMO] the CBI has not been able to sustainably curb inflation by controlling the money supply and overseeing the balance sheets of banks.   
OMO is a financial instrument through which central banks buy and sell securities in the open market to expand or reduce money supply. 
In the framework of OMOs, central banks buy government bonds to increase the money base (cash reserves) and by extension curb inter-banking lending rates.  By the same token, selling government bonds decreases the base money and raises interbank rates. 

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