Monday October 24th, 2016 6:41AM

Egan-Jones cuts US debt rating to AA- from AA

By The Associated Press
NEW YORK - Egan-Jones, an independent credit-research firm, downgraded its rating on U.S. government debt to AA- from AA on Friday, citing the Federal Reserve's plans to try to stimulate the economy.<br /> <br /> The credit rating agency said the Fed's plans to buy mortgage bonds will likely hurt the economy more than help it.<br /> <br /> The plan will weaken the value of the dollar and push up prices for oil and other commodities, Egan-Jones said. That would leave less for consumers to spend on other things.<br /> <br /> But at the same time, Egan-Jones warned that the federal government's borrowing costs are likely to slowly rise as the global economy recovers.<br /> On Thursday, the Fed said it would buy $40 billion of mortgage bonds a month to help the economic recovery.<br /> <br /> It's the second time the Haverford, Pa. shop has downgraded U.S. government debt in five months. In April, Egan-Jones lowered its rating on the U.S. to AA from AA+. It stripped the U.S. of a top AAA rating in July 2011.<br /> <br /> Sean Egan, the company's founder, has long railed against the power of the three major rating agencies, Moody's Investors Service, Standard & Poor's and Fitch Ratings. Egan-Jones Rating Co. is one of 10 firms the Securities and Exchange Commission recognizes as a rating organization.<br /> <br /> Earlier this week, Moody's said it would likely lower its "Aaa" rating on U.S. government debt if budget negotiations fail.<br /> <br /> Standard & Poor's stripped the government of its "AAA" rating on its bonds in August 2011. Fitch Ratings issued a warning of a potential downgrade.
  • Associated Categories: U.S. News, Business News
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