Fitch downgraded the US rating by one notch from the highest level
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The Fitch rating agency lowered the credit rating of the US government by one notch – from the highest level of AAA to AA+.
As the reasons, the agency pointed to the growth of the debt burden at all levels of government – from federal to local – and the steady deterioration of state governance standards over the past two decades, notes the Voice of America.
The lowered rating, however, refers to the investment level. At the same time, a decrease in the credit rating may eventually lead to an increase in the cost of borrowing for the US government.
It became known on May 24 that Fitch would leave the government with a AAA rating. Then Congress again tried to raise the national debt ceiling. A week later, an agreement was reached, which provided for the temporary cancellation of the borrowing limit and the reduction of the federal budget deficit by 1.5 trillion dollars over the next ten years.
According to Voice of America, Fitch informed representatives of the Biden administration that the storming of Congress on January 6, 2021 was one of the factors that influenced the decision to lower the rating, as it indicated the instability of the government.
The current downgrade is the second time in the history of the United States. In 2011, the Standard & Poor’s rating agency left the USA with the highest AAA rating after a long standoff over raising the national debt ceiling. According to estimates by the US Treasury, the budget standoff in 2011 increased the cost of borrowing for the Treasury Department by $1.3 billion that year.
The White House criticized Fitch’s decision.
US Treasury Secretary Janet Yellen also expressed disagreement with the downgrade. According to the minister, Fitch’s amendment is arbitrary and based on outdated data.
Yellen noted that the US economy quickly recovered from the recession caused by the pandemic, the unemployment rate is the lowest in almost half a century, and the growth rate in the second quarter was almost 2.5% on an annual basis.
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