Increased interest rates is a form of purchase or sale Open Market Operation (OMO)? How does this effect the OMO process and its implications for the cash rate, interest rates, inflation and GDP?

Increased interest rates reduce the amount of money in the reserve banks, thus slowing down the Open Market Operation. When the OMO procedure is declined, loans become more expensive because money is less available for loaning out to individuals and organizations.

When individuals and organizations are borrowing less, the cash rates by the central bank will reduce. Organizations and individuals will, therefore, invest in less yielding investments with low-interest rates. Some of the investments include savings accounts that bear interests. This eventually leads to reduced inflation. When inflation is low, GDP growth reduces.