- Moody’s has downgraded its outlook for the US government from stable to negative
- However, the US will maintain its AAA credit rating, the agency confirmed this evening
Credit rating agency Moody’s Analytics has downgraded its view of the US government from stable to negative, it emerged this evening.
Officials pointed to higher interest rates and concerns about U.S. fiscal strength as part of the justification for the move.
Biden administration officials responded to the decision on Friday, calling the shift a reflection of “extremism and dysfunction” among Republicans in Congress.
In a statement, Moody’s wrote: ‘In the context of higher interest rates, without effective fiscal measures to reduce government spending or increase revenues.
“Moody’s expects US budget deficits to remain very large, significantly reducing debt affordability.”
Credit rating agency Moody’s Analytics has downgraded its view of the US government from stable to negative, it emerged this evening
It added that “political polarization” in Washington increases the risk that successive governments will be unable to “reach a consensus on a budget plan to slow the decline in debt affordability.”
Despite the strong language, Moody’s affirmed the U.S. AAA rating and added that it expects the U.S. to maintain its “exceptional economic strength.”
Deputy Finance Minister Wally Adeyemo said: “While Moody’s statement maintains the United States’ AAA rating, we disagree with the shift to a negative outlook.
“The U.S. economy remains strong, and Treasury bonds are the world’s leading safe and liquid asset.”
White House spokesperson Karine Jean-Pierre said the change was “yet another consequence of Republican extremism and dysfunction in Congress.”
Moody’s cited several recent political events as reasons for the decision. This included the near-default earlier this year, before Congress approved a debt limit increase.
It resulted in the appointment of Speaker of the House of Representatives Kevin McCarthy – the first time in history that a Speaker of the House of Representatives has been given the boot.
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