The open market operations is the way for the federal reserve to slow down the economy when it is growing too quickly or is inflationary.
Things will become more expensive if the economy expands more swiftly than it can support. When consumers want to purchase more than stores and companies are able to provide, this occurs. Gross domestic product is used to gauge economic growth (GDP).
So long as that growth rate is sustainable, a rapidly expanding economy is desirable. The economy, however, occasionally grows too quickly. This is referred to as "overheating" in economics. When the economy is unable to meet all of the demand from consumers, businesses, and the government, it is said to be overheating.
The Federal Reserve wants to affect interest rates in order to curb inflation. The Federal Reserve normally boosts interest rates to slow the economy and lower inflation when it is out of control.
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