The United States has lost its triple-A credit rating with Moody’s on Friday, the credit rating company citing the increase in federal debt and interest costs.
The United States has been downgraded from AAA, the highest note to AA1. Some sovereigns with an AAA of Moody’s note include the European Union, Canada and Germany, while other AA1 countries include Austria and Finland.
Moody’s was the last triple credit note that the United States had after being previously downgraded by other large rating agencies. Fitch notes previously degraded the United States in 2023, while the Global S&P notes did it in 2011.
“Successive administrations of the United States and the Congress have not agreed to cancel the trend of major annual budgetary deficits and increasing interest costs,” said Moody’s in a press release, adding that it did not think that current budgetary policies under study would cause discounts of expenses or deficits.
“During the next decade, we expect greater deficits as law expenditure increases while government revenues remain largely stable,” said the statement. “In turn, persistent and persistent budgetary deficits will strengthen government debt and the burden of interests. The budgetary performance of the United States is likely to deteriorate in relation to its own past and compared to other highly appreciated sovereigns.”
Moody’s has also changed its prospects for the United States from negative to Stable, citing “exceptional credit forces”, including its size, its resilience, its dynamism of the economy and the role of the US dollar as a global reserve currency. It has also cited institutional factors, in particular an independent federal reserve developing monetary policies and the constitutional separation of powers.
“Although these institutional arrangements can sometimes be tested, we expect them to remain strong and resilients,” said the press release.
President Donald Trump is committed to reducing national debt, which exceeds 36 billions of dollars.
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