Some market professionals were quick to say that the step would not be sufficient to soften the blows hammering the wider muni market.
The central bank said its program to support money market mutual funds will also serve as a backstop for state and local governments.
The Money Market Mutual Fund Liquidity Facility, established under the central bank’s emergency authority, echoes a version that was set up during the global financial crisis.
An imagined conversation with the legendary Vanguard founder about the coronavirus market crash.
The Federal Reserve's support for the commercial paper market made clear that it was willing to go beyond cutting interest rates, but the central bank may feel pressure to do even more as the crisis worsens.
Fund managers may be better equipped to weather the market storm than their passive peers because of their ability to quickly cut risk.
The bloodbath in risk assets has intensified on deepening concerns about the economic fallout from the spread of the coronavirus.
A recent sale-tax hike in the country and the impact of the coronavirus have driven the yen to it's biggest two-day drop since 2017.
A flight to safety that saw funds in short-term bonds and utilities add cash as coronavirus dominated headlines has given way to a vigorous rally.
While the deadly virus threatens to harm the world economy, the funds have remained popular as the Fed signals low rates for the foreseeable future.