U.S. credit rating could be headed down
TEXT OF STORY
Steve Chiotakis: The dollar’s getting hammered today against some big foreign currencies. All amid fears the U.S. could be headed for a lower credit rating. That’s because yesterday, we heard from Standard & Poor’s, which lowered its outlook for the United Kingdom. But could a ratings downgrade *really be in the cards? From North Carolina Public Radio, here’s Marketplace’s Janet Babin.
Janet Babin: The U.K. has held onto its gold star credit status. since the 70’s. And here in the U.S., we’ve been Triple-A rated since the 19-40’s. Losing the top rating is a signal that a country could default on its debts. It makes it cost more to borrow money. And a downgrade could prompt global investors to dump U.S. Treasury Bonds.
But most analysts believe such a downgrade is unlikely, and that even with these concerns, the economy’s improving.
One sign of recovery: U.S. banks reduced borrowing this past week from the Federal Reserve’s Emergency loan program. And investment firms didn’t borrow anything at all. It’s the first time that’s happened since early September.
I’m Janet Babin for Marketplace.
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