Moody’s has downgraded the United States’ credit rating from AAA, marking the end of the nation’s top-tier status with a major ratings agency. The downgrade to ‘Aa1’ cites the substantial increase in federal debt over the past decade.
The agency highlighted the failure of successive administrations to curb escalating deficits and interest payments as a key factor in the decision. A triple-A rating signifies the highest level of creditworthiness, indicating exceptional financial health and repayment capacity.
Moody’s had previously warned of a potential downgrade in 2023. This follows similar actions by Fitch Ratings in 2023 and S&P Global Ratings in 2011.
The downgrade reflects “the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns,” according to Moody’s statement.
A lower credit rating typically increases the risk of sovereign debt default and leads to higher borrowing costs for the nation. However, Moody’s acknowledged the US “retains exceptional credit strengths such as size, resilience and dynamism and the continued role of the US dollar as the global reserve currency”.
The US Department of Treasury has been contacted for comment by the BBC.
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