Fed Decides to Purchase Municipal Bonds as Well

[Asia Economy New York=Correspondent Baek Jong-min] The United States central bank, the Federal Reserve (Fed), has decided to purchase municipal bonds to enhance the function and liquidity of the state and local government funding markets.

In a statement released that day, the Fed announced that it will supply liquidity to the municipal bond market through the 'Money Market Mutual Fund Liquidity Facility' (MMLF).

The Fed's purchase of municipal bonds is a measure that was not taken even during the 2008 global financial crisis. It signifies that the Fed has begun an unprecedented path to aggressively prevent market turmoil caused by the novel coronavirus disease (COVID-19).

The Fed had previously announced plans to purchase Treasury securities, mortgage-backed securities (MBS), and commercial paper (CP).

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