Moody's revises US outlook to 'negative'

In a statement released by Moody's, it was noted that the primary reason for the shift to a negative outlook is the increase in downside risks to the fiscal strength of the United States.

The statement emphasized that in the context of high interest rates, without effective fiscal policy measures to reduce government spending or increase revenues, the US fiscal deficits are expected to remain large, which is projected to significantly weaken debt affordability.

The statement also noted that ongoing political polarization in the US Congress increases the risk that successive governments will be unable to reach a consensus on a fiscal plan that would slow the decline in debt affordability.

"US INSTITUTIONAL AND GOVERNANCE STRENGTH IS HIGH"

The statement indicated that the affirmation of the US "Aaa" credit rating reflects Moody's view that the US continues to maintain its credit strength. It was emphasized that the US is expected to maintain its "extraordinary" economic strength and that, in the medium term, further positive growth surprises could at least slow the deterioration in debt affordability.

The statement further noted that the institutional and governance strength of the US remains high, supported in particular by the effectiveness of monetary and macroeconomic policies, adding: "As the US economy and financial sector continue to adjust to higher interest rates for a longer period, policymakers have facilitated the transition through transparent and effective policies."

News Source: AA