The Federal Reserve on Tuesday handed down an emergency interest rate cut to combat any slowdown the US economy could see from the spreading coronavirus outbreak.

The 50-basis-point cut was an unexpected and rare move showing that the central bank considers a coronavirus outbreak a threat to the US economy.

But the lower interest rates coupled with coronavirus could do more harm than good and lead the US economy to a toxic situation where prices surge but growth slows, Nancy Davis, portfolio manager of the Quadratic Interest Rate Volatility and Inflation Hedge ETF (IVOL) told told Markets Insider in an interview.

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This article contains the opinion of the manager. It should not be regarded as investment advice.