S&P;’s rating downgrade wrong decision: US official

August 7th, 2011 - 2:24 pm ICT by IANS  

Washington, Aug 7 (IANS) Global rating agency Standard and Poor’s (S&P;) made a hasty and wrong decision of stripping the US of its top-notch credit rating, a senior US Treasury official said.

S&P; Friday removed for the first time the AAA long-term sovereign credit rating for the US and lowered it by one notch to AA-plus.

“Their analysis is poorly and hastily done. By moving so quickly, they made the wrong decision without the right information,” the official told Xinhua over the phone Saturday.

The rating agency should pay more attention to the debt reduction efforts in Washington, the official said on condition of anonymity.

The official believed that the downgrade won’t have a big impact on global financial markets as the other two global rating giants Fitch and Moody’s retained their triple-A credit rating for the US.

Market investors know the ropes of the US debt reduction process and the just-signed bipartisan debt legislation, and “there is nothing new in S&P;’s downgrading report, except for their downgrade decision”, said the official.

Obama Tuesday signed a bill that raises the nation’s debt limit through 2013 and cuts the deficit by more than $2 trillion, but the deficit-cutting package fell far short of the $4 trillion cited by S&P; to avoid a downgrade.

The official declined to comment on the downgrade impact on the pivotal role of US dollar in the global financial system, but said that US Treasury securities still remain a safe haven for global investors, as the nation has enormous capacity to pay.

When asked about how the US can better protect the interest of foreign debt holders including China, the official contended that the best way is to facilitate a robust economic growth and generate more tax revenue in the US, adding that the nation has gone past the borrowing peak in 2009 after the onset of the financial crisis.

The official rebuffed the emerging worries of a “double-dip” recession of the US economy, saying that the nation Friday released a better-than-expected job market report and the economy was on track to recovery.

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