US Credit Rating Cut After Fed Decision
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Egan-Jones Ratings Co. downgraded its credit rating for the United States today, dropping the rating down a notch to AA-. The agency said that the third round of large-scale asset purchases (QE3) by the Federal Reserve has the possibility of weakening the US Dollar, which would push up inflation.
News broke early Friday morning that the US dollar fell against the Euro and the Swiss franc in the European markets. Also on Friday morning, Fox Business anchor Stuart Varney questioned the impact of the Fed’s decision on US markets.
Representatives from Egan-Jones said that the QE3 Decision has the possibility to “stoke the stock market and commodity prices, but in our opinion will hurt the U.S. economy and, by extension, credit quality,”
They also commented on how this will impact American consumers by saying, “The increased cost of commodities will pressure profitability of businesses, and increase the costs of consumers, thereby reducing consumer purchasing power.”
According to the Egan-Jones website, the company utilizes an “unbiased, rules-based methodology and corporate credit ratings with zero issuer influence on approximately 1,000 very widely held IG, Crossover and HY corporations assist clients minimize portfolio risk and exploit unrecognized opportunity.”
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