• 
• See all for FXstreet.com
• View Print Version

FXstreet.com (San Francisco) - Egan Jones, the independent rating agency, has cut the United States' rating from AA to AA- according to a press release published on Friday.

"In our opinion QE3 will be detrimental to credit quality for the US," says Egan Jones in the release. "The FED's QE3 will stoke the stock market and commodity prices, but in our opinion will hurt the US economy and, by extension, credit quality."

The agency continues saying that "issuing additional currency and depressing interest rates via the purchasing of MBS does little to raise the real GDP of the US, but does reduce the value of the dollar (because of the increase in money supply), and in turn increase the cost of commodities (see the recent rise in the prices of energy, gold, and other commodities)."

"The increased cost of commodities will pressure profitability of businesses, and increase the costs of consumers thereby reducing consumer purchasing power," adds Egan Jones.

Egan Jones compares the situation in Spain with US: "From 2006 to present, the US's debt to GDP rose from 66% to 104% and will probably rise to 110% a year from today under current circumstances; the annual budget deficit is 8%. In comparison, Spain has a debt to GDP of 68.5% and an annual budget deficit of 8.5%."

Related Forex and Currencies Articles

• 
  Forex - Dollar mostly higher as Fed sees easing end in 2014
  6/19/2013 06:30 PM
• 
  Forex - NZD/USD falls as Q1 GDP disappoints
  6/19/2013 06:29 PM
• 
  Forex - AUD/USD falls as end of stimulus seen near
  6/19/2013 06:29 PM