The United States lost its highest credit rating from Fitch Rating Agency. This means that US government bonds are no longer among the safest investments in the eyes of the rating agency. This is the first time in more than ten years that a leading rating agency has taken this step.
US government securities no longer have the desired AAA rating at Fitch, but are rated AA+. This reduction comes as a result of the political battle over the debt ceiling in Washington. After weeks of negotiations, President Joe Biden’s Democrats and Republicans reached an agreement on the matter in May.
However, this did not allay concerns at Fitch, which has given the US a AAA rating since 1994. “The downgrade of the US rating reflects the expected fiscal deterioration over the next three years, high and growing government debt, and eroding governance,” the credit rating agency said in a statement. .
“Random and outdated”
US Treasury Secretary Janet Yellen responded by calling Fitch’s downgrade “arbitrary” and “outdated.” The White House also reacted negatively to the decision. “The downgrade of the United States is contrary to reality at a time when President Biden has achieved the strongest recovery among the world’s largest economies,” spokeswoman Karine Jean-Pierre said in a statement.
The last time the US credit rating was downgraded was in 2011, when credit agency Standard & Poor’s lowered its rating to AA+, also due to a dispute between Democrats and Republicans over the debt ceiling. Standard & Poor’s has not revised the US rating since then. The country still has a AAA rating from Moody’s. A high score can help a country borrow money at favorable interest rates.
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