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Fitch downgrades US credit rating from AAA to AA+

Fitch downgrades US credit rating from AAA to AA+

Due to concerns regarding the rising fiscal deficit and deterioration in governance standards, Fitch Ratings recently revised the sovereign credit rating of the United States, downgrading it from AAA to AA+.

Sovereign credit ratings serve as an indicator of a country’s creditworthiness, and different rating agencies use different methods to assign these ratings. Fitch Ratings designates ‘AAA’ as the highest rating, while ‘AA+’ represents the next level of top-quality credit.

The rating adjustment follows the recent controversy over the credit limit hike. Earlier this year, US political factions were engaged in eleventh-hour talks over a debt ceiling deal.

The rationale behind this downgrade, as reported by Fitch Ratings, centers on the anticipated deterioration in the fiscal outlook over the coming three years, which contributes to an increase in the government debt burden.

Explaining the decision, Fitch Ratings said, “Over the last two decades, there has been a steady deterioration in governance standards, including aspects such as fiscal management and debt matters. The decision to temporarily suspend the debt ceiling was made in June. This trend has persisted despite bipartisan consensus.” By January 2025.”

Analysts claim the action underscores the deepening fallout of the United States’ repeated and contentious discussions on the debt ceiling. Such debates have repeatedly brought the country to the brink of default, causing huge losses.

This credit rating revision led to a fall in US stock prices, resulting in global stock markets grappling with financial turmoil in the euro area.

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