(CBS/AP) NEW YORK - Credit rating agency Egan-Jones is downgrading its rating on U.S. debt to AA- from AA, citing Federal Reserve plans to try to stimulate the economy.
The firm said the Fed's plans to
buy mortgage bonds will likely hurt the economy more than help it.
Egan-Jones said the plan will reduce the value of the dollar and raise
the price of oil and other commodities, hurting businesses and
"Up, up and away -- the Fed's QE3 will stoke the stock
market and commodity prices, but in our opinion will hurt the U.S.
economy and, by extension, credit quality," Egan-Jones said in a report
Friday, alluding to a third round of quantitative easing announced
by the central bank Thursday.
"Issuing additional currency and
depressing interest rates via the purchasing of [mortgage-backed
securities] does little to raise the real GDP of the U.S., but does
reduce the value of the dollar... and in turn increases the cost of
commodities (see the recent rise in the prices of energy, gold and other