Open Market Operations. First, the Fed buys financial instruments to put more money into circulation. With more money available, interest rates tend to fall and so more money is borrowed and spent. Second, the Fed sells financial instruments to put money out of circulation, causing interest rates to rise, making borrowing more expensive and therefore less accessible. Third, the Fed regulates the amount of reserves. A bank lends out most of the money deposited in it. If the Fed says they should hold more reserves, the amount of money a bank can lend decreases, making credit more unaffordable and causing interest rate increases. Also, change the interest rate at which banks can charge the Federal Reserve System. Member banks can borrow on a short-term basis