Posted May 08, 2019 05:20:36Australia’s credit ratings are under pressure after a BIS downgrade, but the company that manages them said it was not because of the impact of the BIS cut.
Key points:BIS cut to $30 from $80Citi cut its rating to ‘negative’ from ‘neutral’Source: BIS websiteThe downgrade is the first of several in recent monthsThe Australian Credit Rating agency (ACR) cut its ratings to ‘neutral’, from ‘negative’, and the Bank of America Corp cut them to ‘junk’.BIS chief economist and head of the Moody’s credit default swap facility, Scott Horsfall, said the ratings were at risk because of concerns about the economy and inflation.
He said the outlook was negative, pointing to “a continued decline in labour force participation, weak growth in nominal GDP and rising inflation”.
“The underlying outlook for Australia’s outlook for the economic outlook and inflation is very negative,” he said.
“It will continue to deteriorate in the coming months as the labour force and housing market slow and there is a persistent risk of the recovery from the recent negative shock being stifled.”
Mr Horsford said the country’s outlook was also likely to be influenced by the impact the Bis cut had on global demand.
“The BIS has cut its credit rating by 20 basis points from its previous rating,” he wrote in a blog post.
“We expect that the downgrade of Australia’s sovereign credit rating to negative will likely have a significant impact on the global economy.”