What is the principle monetary policy tool used by the Fed. Why?

What will be an ideal response?

The tool that the Fed primarily uses is open market operations. There are three reasons. First, because the Fed is the party that initiates the open market operations, it completely controls the volume. Second it can make the volume large or small, depending on how many U.S. Treasury securities it decides to buy or sell. Finally, it can implement this policy tool quickly. It does not have to change regulations and the administrative machinery is in place for it to make changes quickly.