The major financial ratings firm Standard & Poor’s (S&P) officially lowered the U.S. credit rating on August 5. This downgrade is widely being characterized as a massive shake-up bound to cause problems for major financial markets. Effects of the lowered rating on individual consumers are not yet clear, according to the Boston Globe.
The news source reports that some fear drastic and damaging consequences to the U.S. economy, including inflation and increased interest rates. Others believe that such consequences are not definite, and if they are to occur they will not come for several months.
Although the lowered credit ratings of the U.S. – and of major financial agencies Fannie Mae and Freddie Mac – will certainly increase Treasury bond interest rates, the consumer interest rates may only increase negligibly due to the stable, established reputation of those bonds. Bill Driscoll, a Plymouth, Massachusetts financial planner, confirmed this fact.
“The Federal Reserve is going to do everything it can to keep interest rates low, and it has more influence than Standard and Poor’s,” Driscoll told the news source.
Reuters reported that the Banking Committee of the U.S. Senate is initiating an investigation into the S&P credit rating downgrade, though no announcements of official hearing have been made as of August 9.