Reuters — On November 10th, Moody’s, a renowned credit rating agency, revised its perspective on the credit rating of the United States. The outlook was shifted from “stable” to “negative”, while the rating itself, which is at AAA (the topmost investment-grade level), remained unchanged.
This modification is linked to a notable surge in the costs related to debt servicing and the existence of deep-seated political divisions. Moody’s pointed out that the steep increase in Treasury yields this year has amplified the already existing strain on the affordability of US debt.
Without any policy intervention, the agency anticipates a continuous and substantial deterioration in the US’s debt affordability. This could lead to extremely weak levels when compared to other sovereign nations with high ratings.
In contrast, other agencies such as Standard & Poor’s and Fitch have maintained a “stable” outlook on their credit ratings for the United States, which stand at AA+. Similarly, DBRS’s credit rating for the United States remains at AAA with a “stable” outlook.
Moody Impact on the Economy
The change in Moody’s outlook could potentially have negative implications for the economy. It might lead to increased borrowing costs for the government, which could then trickle down to consumers in the form of higher interest rates. However, it’s also important to note that the actual impact would depend on a variety of factors, including the government’s response to this situation.
