The United States is one step closer to losing its last perfect credit rating after Moody’s Investors Service changed the outlook of the nation’s debt to negative on Friday after markets closed.
While the move does not automatically mean it will downgrade America’s creditworthiness, it increases the chances.
The nation’s diminished fiscal strength was a key driver of the action, according to a statement put out by Moody’s.
”In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues, Moody’s expects that the US’ fiscal deficits will remain very large, significantly weakening debt affordability,” the statement said.
“Continued political polarization within US Congress” also played a major role in the committee’s decision. This, they said, “raises the risk that successive governments will not be able to reach consensus on a fiscal plan to slow the decline in debt affordability.”
This story is developing and will be updated.
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