Fed to help banks purchase muni bonds to keep credit flowing

Fed to help banks purchase muni bonds to keep credit flowing

The Federal Reserve said it would seek to hold down spiking interest rates in the state and municipal bond market by supporting banks' purchase of the bonds

By

CHRISTOPHER RUGABER AP Economics Writer

March 20, 2020, 3:15 PM

1 min read

WASHINGTON -- The Federal Reserve said it would seek to hold down spiking interest rates in the state and municipal bond markets by supporting banks' purchase of the bonds.

The Fed said Friday that it would loan money to banks that could be used to purchase highly-rated muni bonds.

Yields in the muni bond market have jumped in the recent weeks as money market funds and other investors sell those securities to raise cash.

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