The credit score rankings agency Moody’s decreased its outlook on the US government from secure to negative, citing division in Washington DC and dangers to the nation’s fiscal power.
While Moody’s maintained the US’s present top-grade AAA score, it raised the prospect that this can be lower.
Moody’s warned that the US’s deficits are possible to stay “very large” within the face of upper rates of interest. It additionally cautioned that “continued political polarization” in Congress rasies the chance that governments “will not be able to reach consensus on a fiscal plan to slow the decline in debt affordability”.
The federal government is on the brink of one other shutdown, with only a week left for the Republican-led House, Democratic-led Senate and Biden White House to attain a breakthrough on funding.
The Biden administration stated it disagreed with the choice, which comes simply three months after one other main agency, Fitch, downgraded its high score for the US. Standard & Poor’s, the opposite main rankings agency, had already completed so.
“In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues, Moody’s expects that the US’s fiscal deficits will remain very large, significantly weakening debt affordability,” the agency stated in a press release.
Wally Adeyemo, the US deputy treasury secretary, stated: “While the statement by Moody’s maintains the United States’ AAA rating, we disagree with the shift to a negative outlook. The American economy remains strong, and treasury securities are the world’s pre-eminent safe and liquid asset.”
Karine Jean-Pierre, White House press secretary, advised the transfer was “yet another consequence of congressional Republican extremism and dysfunction”.
