The Federal Reserve has engaged in an emergency interest rate cut of 0.5 per cent in response to the spreading of the coronavirus which has disrupted economic activity in many countries, with the risks to the US outlook having changed materially. The central bank reiterated its intentions to use its tools to support the economy where it can, however, the question is whether or not lower interest rates can stimulate consumer spending, revive the tourism and travel industries and support manufacturing companies who require materials from abroad. US equity markets rose sharply on the news, but later pulled back, while government debt also strengthened following the announcement, as represented by a fall in yields.