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Fitch Ratings has downgraded the US credit rating, citing an expected increase in government debt over the next three years and a \u201csteady deterioration in standards of governance\u201d over the past two decades.<\/p>\n
The rating was cut one notch to AA+ from AAA, the highest possible rating. The new rating is still well into investment grade.<\/p>\n
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Fitch cited the worsening political polarisation around spending and tax policy as a key reason for the downgrade.<\/span>Credit: <\/span>Bloomberg<\/cite><\/p>\n Fitch cited the worsening political polarisation around spending and tax policy as a key reason for the downgrade. It said US governance has declined relative to other highly rated countries and it noted \u201crepeated debt limit standoffs and last-minute resolutions.\u201d<\/p>\n \u201cIn Fitch\u2019s view, there has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025,\u201d the rating agency said in a statement.<\/p>\n In 2011, the ratings agency Standard & Poors stripped the US of its prize AAA rating and also pointed to partisan divisions that made it difficult for the world\u2019s biggest economy to control spending or raise taxes enough to reduce its debt.<\/p>\n \u201cThe change by Fitch Ratings announced today is arbitrary and based on outdated data,\u201c: US Treasury Secretary Janet Yellen.<\/span>Credit: <\/span>AP<\/cite><\/p>\n Reduced credit ratings could lead the US to pay higher interest rates on its notes, bills, and bonds.<\/p>\n US Treasury Secretary Janet Yellen criticised the move.<\/p>\n \u201cI strongly disagree with Fitch Ratings\u2019 decision. The change by Fitch Ratings announced today is arbitrary and based on outdated data,\u201d Yellen said in a statement.<\/p>\n LPL Financial chief global strategist Quincy Krosby said the move is a warning shot to the US.<\/p>\n \u201cThis is a warning. Economists say that if the US doesn\u2019t get its fiscal house in order, its currency is going to weaken, but the currency doesn\u2019t weaken. And what Fitch is essentially saying is, it\u2019s going to happen and the dollar is going to become a casualty.\u201d<\/p>\n<\/p>\n