Question

How does Quantitative Easing differ from regular OMO (open market operations)?

Answer 1

Quantitative Easing (QE) is achieved using Open Market Operations (OMO). They are essentially the same thing. The difference is with QE the amount of money to be created is specified in advance and it's a massive quantity (hence "quantitative"). With normal OMO there is a target for the interest rate on government bonds and bonds are purchased by the central bank with newly created money until the low interest rate is achieved. Essentially though in a case of either a low interest rate target or QE the actual process and amounts can be exactly the same with the only difference being the pre-announcement of the amount given in QE.