Moody’s Ratings, the last of the three major rating agencies, has stripped the United States of its impeccable credit rating for the first time since 1917. About this informs CNN.
This decision could cause turmoil in financial markets and cause interest rates to rise, which in turn would create an additional burden on American citizens.
Moody’s was the only one of the three leading agencies to retain the US’s top AAA rating until now. Since 1917, the agency has maintained an impeccable credit rating for American debt. Now the rating has been lowered by one level to Aa1. Previously, the other two agencies, Fitch Ratings and S&P, downgraded the US rating in 2023 and 2011, respectively.
“The decision to reduce the debt was influenced by the increase for more than ten years of public debt and interest payment ratios to levels that are significantly higher than those of sovereign countries with a similar rating”, Moody’s said in a statement.
In the future, Moody’s predicts an increase in US borrowing needs, which will have a generally negative impact on the country’s economy. The agency first warned of a possible downgrade in November 2024, pointing to a critical moment when the US came close to default in the summer of 2024, which eventually led to the resignation of House Speaker Kevin McCarthy.
Currently, another downgrade is not an immediate threat. The agency considers the US outlook to be “stable” thanks to “a long history of highly effective monetary policy led by an independent Federal Reserve System.”
