An Open Market Operation (OMO) refers to sale or purchase of government securities (bonds) by Reserve Bank of India (RBI). OMOs help RBI manage rupee liquidity in market and keep bond yields at desired levels. If liquidity is excess, RBI sells G-Secs and sucks out the extra. To inject liquidity, it buys bonds. Now, what is yield? It refers to annual return one gets on a bond. Bond yield and prices move in opposite directions. Government is the biggest issuer of bonds and uses it to raise money to fund expenditure. So, when yields rise, government's borrowing cost jumps. RBI uses OMOs to keep yield low and lower government's borrowing cost. RBI has just announced a Rs 20,000-crore OMO.