FILE - In this Feb. 5, 2018, file photo, the seal of the Board of Governors of the U.S, Federal Reserve System lies embedded in the floor at the Marriner S. Eccles Federal Reserve Board Building in Washington. The Federal Reserve announced late Wednesday, March 18, 2020, that it will establish an emergency lending facility to help unclog a short-term credit market that has been disrupted by the coronavirus outbreak. The Fed said it will lend money to banks that purchase financial assets from money market mutual funds, including short-term IOUs known as commercial paper. (AP Photo/Andrew Harnik, File)
The Associated Press
WASHINGTON (AP) - 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.