Business

Moody’s downgrades the US credit rating outlook to “negative”

Citing the expense of rising interest rates and political polarization in Congress, credit rating agency Moody’s Investors Service downgraded its outlook on the US government’s debt on Friday to “negative” from “stable”.

Despite being the latest of the three major credit rating agencies to do so, Moody’s maintained its highest triple-A credit rating on U.S. government debt. In August, Fitch Ratings cut its rating from AAA to AA, and in 2011, Standard and Poor’s downgraded the US. But a worse outlook increases the possibility that Moody’s may eventually revoke the US’s triple-A rating as well.

If borrowers demand higher interest rates on Treasury bills and notes, a downgrade of US debt might have a negative financial impact on taxpayers. The yield on the 10-year Treasury has increased dramatically since July, rising from roughly 3.9% to 4.6% on Friday—an exceptionally rapid increase.

Also Read : A song about millets with PM Modi has been nominated for a Grammy Award

While the majority of market analysts see other variables as larger drivers—such as the Federal Reserve’s determination to maintaining its benchmark rate at a 22-year high in order to combat inflation—some have speculated that the August Fitch rating may have contributed to that increase.

“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 statement.

Moody’s ruling was questioned by the Biden administration.

Deputy Treasury Secretary Wally Adeyemo stated, “We disagree with the shift to a negative outlook, even though Moody’s maintains the United States’ Aaa rating.” “The American economy remains strong, and Treasury securities are the world’s preeminent safe and liquid asset.”

Also Read : (Express Editorial) CWC23: Mission Impossible of Pakistan

The federal government’s budget deficit increased from USD 1.38 trillion to USD 1.7 trillion in the fiscal year that concluded on September 30. Analysts have cautioned that if interest rates rise, a growing portion of tax revenue will be consumed by interest payments on the national debt.

In a related development, congressional representatives departed Washington for the weekend without a strategy in place to avert a possible government shutdown that might happen by November 17. Moody’s downgraded its assessment of US debt, citing legislative instability as one of the reasons.

“Recently, multiple events have illustrated the depth of political divisions in the US: Renewed debt limit brinkmanship, the first ouster of a House Speaker in US history, prolonged inability of Congress to select a new House Speaker, and increased threats of another partial government shutdown,” said Moody’s.

Naiteek Bhatt

Recent Posts

India & Central Asia Boost Rare Earth Cooperation At Delhi Meet

India and five Central Asian nations have agreed to deepen cooperation on rare earths and…

19 mins ago

PM Modi’s Beej Se Bazaar Tak Vision Reshapes Indian Agriculture

Prime Minister Modi has redefined Indian agriculture with the ‘Beej Se Bazaar Tak’ vision, transforming…

43 mins ago

EV Sales Cross 4% Mark In May; Signalling Steady Shift To Green Mobility

EV sales topped 4% of passenger vehicle retail in May 2025, signalling growing demand for…

1 hour ago

Self-Reliant Defence Industry Marks India’s Strategic Security Ascent

One year into Modi 3.0, reforms have reduced poverty, strengthened defence, and accelerated the digital…

1 hour ago

Survey Shows Over 88% Indians Trust PM Modi On National Interest & Security

A recent News18 survey reveals that more than 88 per cent of Indians trust Prime…

2 hours ago

PM Modi: NDA Government Has Redefined Women-Led Development Over 11 Years

Marking 11 years of the NDA govt at the Centre, PM Modi stated that women-led…

2 hours ago