Moody’s downgraded the outlook for the US debt situation from negative due to high interest rates and doubts about the US government’s ability to implement effective fiscal policy. This was announced on Friday evening.
A negative outlook means that the US credit rating may be downgraded. Currently, the US is the only company with ‘Triple A’ status with Moody’s. Fitch Ratings downgraded the US’s top-tier credit rating to AA+ from AAA in August. S&P downgraded the rating to AAA in 2011 after the previous budget debate and has maintained the AA+ rating.
“The sharp rise in U.S. Treasury yields this year has increased pre-existing pressures on U.S. borrowing capacity. Without policy action, Moody’s expects U.S. borrowing capacity to decline further, steadily and significantly relative to other highly rated countries.” Moody’s said in a note.
Commenting on the announcement, a Biden administration official said they disagreed with Moody’s warning.
“While Moody’s report maintains America’s AAA rating, we disagree with the move to a negative outlook. The U.S. economy remains strong and Treasury bills are the safest and most liquid asset in the world,” said Under Secretary of State Wally Adeyemo. In a statement.
According to Moody’s, if policymakers in Washington fail to address growing fiscal challenges in the medium term, the US credit rating could be downgraded.
