US Credit Rating To Be Cut By Fitch; Treasury Names It “Arbitrary”
The rating agency Fitch downgraded the American government’s top credit rating on Tuesday. It was a step that had drawn an annoyed reaction from the White House and shocked the investors that came amid the commitment of the debt ceiling crisis two months back.
Fitch had downgraded the U.S to AA+ from AAA, specifying fiscal deterioration over the next three years, and repeated a down-the-wire ceiling bargain that further threatened the ability of the government to pay bills.
The first possibility of a downgrade was flagged by Fitch in May- a position that was maintained in June while the debt ceiling crisis was getting resolved, claiming that it aspires to finalize the review in the third quarter of this financial year.
With the downgrade, Fitch has become the second vital rating agency after Standard & Poor’s to rip the United States off its triple-A ratings.
The announcement resulted in the fall of the dollar over a range of currencies, a tick down of stock futures, and an increase in the Treasury futures. However, multiple analysts and investors said that they had expected a limited impact of the downgrade.
“In Fitch’s 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,”
the rating agency added in a statement.
Janet Yellen, the U.S. Treasury Secretary, however, disagreed with Fitch’s downgrade in a statement that claimed it to be “arbitrary and based on outdated data.”
The White House, too, had an analogous opinion, adding it “strongly disagrees with this decision.”
“It defies reality to downgrade the United States at a moment when President Biden has delivered the strongest recovery of any major economy in the world,”
Karine Jean-Pierre, the White House Press Secretary, added.
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