Fed boosts market liquidity

WASHINGTON: The US Federal Reserve announced on Tuesday that it will start buying commercial paper from money market mutual funds to provide liquidity to US money market investors.

This is the Fed's latest effort to battle the credit crisis that threatens to plunge the world's largest economy into a recession.

In a statement, the US central bank said it is tapping its Depression-era emergency powers and creating a new facility to buy a vast array of commercial paper - a crucial short-term funding mechanism that many companies rely on for day-to-day operations - from the funds.