Japanese Sovereign Debt Downgraded

Japanese rating agency Research & Information Inc. has lowered the country’s sovereign debt rating from ‘AAA’ to ‘AA+’. The agency had this to say about Japan’s economy:

Prospects for economic revitalization are also uncertain. In light of  such circumstances, outstanding government debt would inevitably rise for an extensive period of time even if the consumption tax rate is successfully raised. Accordingly, a path towards the stabilization of outstanding government debt to gross domestic product (GDP), which is already the worst among industrialized countries, is still unclear

At the same time, the Bank of Japan has warned that the country’s economy is being hurt by the European debt crisis and the global economic weakness. The Japanese central bank has cut its outlook for 2012 and believes that growth will be stagnant at least for the first half of the year. The bank did not take any further easing steps, but is expected to do so during the first calendar quarter of 2012.