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The Federal Reserve on Monday announced it was expanding its program to buy bonds directly from states and cities to include more local communities.
In a news release, the Fed said it would now purchase bonds from counties with a population of at least 500,000 residents and U.S. cities of at least 250,000 residents.
That’s a much lower threshold than the initial proposal announced in early April. The first plan was limited to cities with 1 million residents and counties with at least 2 million residents.
A group of Senate Democrats complained in a letter to Fed Chairman Jerome Powell that under the initial limits, the Fed’s program would only benefit 15 counties and 10 cities, leaving out many of the hardest-hit communities. Under the new guidelines, the program covers 261 states, cities and counties, according to a Fed spokeswoman.
The Fed also extended the termination date of the facility to the end of the year, instead of Sept. 30, in order to provide issuers more flexibility.
One of the largest exchange-traded funds that tracks munis, the iShares National Muni Bond MUB, -0.03% was slightly lower in after-hours trading Monday.
