NEW YORK (Reuters) - Announcements should be expected this morning about more knock-on effects to corporations from S&P’s decision to downgrade the United States’ credit rating, the head of Standard & Poor’s sovereign ratings said on Monday.
David Beers also told Reuters Insider television that the U.S. outlook could be raised to stable if the U.S. deficit-cutting deal is fully implemented and the Obama administration ends the Bush tax cuts.
However, Beers said there was a one-in-three chance the U.S. rating could go lower again within six to 24 months.
He added that S&P would be watching to see if the U.S. Congress follows through on the budget consolidation process it committed to while the course of interest rates and the so-far subpar economic recovery would also be factors.
“What may affect whether the rating falls again is first of all the underlying economic story,” Beers said.
“This has been a fairly lackluster recovery, and so we’re watching that very closely because of course it also will influence the future path of public finances.”
Reporting by Emily Flitter, Ashley Lau and Burton Frierson; Editing by James Dalgleish