Treasury Secretary Janet Yellen He stated in his statement that he strongly argues in Fitch Ratings The decision is considered arbitrary. He pointed out that the assessment of the credit rating agency did not take into account the progress made by the United States in terms of critical economic indicators and the quality of governance during the past two and a half years.
The minister responded to part of the credit rating agency’s reasoning that the sharp division in the US legislature poses a risk to the safe payment of the national debt: Despite the political deadlock, the two parties of the US legislature agreed and in June the law that settled the dispute over the problems of the national debt ceiling.
the decision
International credit rating agency Fitch Ratings announced early Wednesday in London that it had withdrawn it
From the United States of America The best possible public debt rating is “AAA”, and it will be credited with a rating of “AA+” going forward. He justified the decision primarily with his expectation that in the next three years US fiscal indicators will deteriorate and the already high public debt burden will increase.
On May 24, due to the delay in agreeing on the US debt ceiling, Fitch Ratings placed the US sovereign debt rating on a negative watch list.
The reason for the move at that time was the increasing political polarization and division between the parties over issues related to the national debt. The credit rating agency’s justification also stated that the quality of US government activity, including public finances and debt matters, has steadily deteriorated over the past twenty years, and the recurrence of political deadlocks and solutions deferred until the last moment in the case of the public. The debt ceiling poses a challenge to US fiscal management. Confidence.
The rating of US debt among the leading international credit rating agencies is only now Moody’sListed with the highest rating.
the Standard & Poor’s In 2011, it pulled the US’s “AAA” elite rating, and has since kept US public debt in the “AA+” category, which is one notch lower.
Credit rating serves as a guide for large investors and also influences the yield at which a country can obtain a loan to renew its national debt.
According to Fitch’s forecast expressed in its announcement on Wednesday, the US public budget deficit measured against GDP will rise to 6.3 percent this year from 3.7 percent last year, and increase to 6.6 percent in 2024 and 6.9 percent in 2025, This is primarily due to projected weak GDP growth next year, higher interest charges, and administrative deficits of individual federal states and local governments.
The major indexes of the New York Stock Exchange fell on Wednesday to an extent not seen in months due to the downgrade of Fitch’s credit rating agency. The Dow Jones index closed down 1 percent, the Standard & Poor’s 500 index, which includes the largest companies, down 1.4 percent, while the Nasdaq index, which includes companies operating in the technology sector, closed down 2.2 percent lower than the previous day.
US debt rating downgrade, or the effects of Fitch’s decision
An almost unprecedented step was taken: the credit rating agency Fitch lowered the credit rating of the United States by one notch from the best in existence. Standard & Poor’s did this 10 years ago, but it was unprecedented. Read more >>>
