Fitch Cuts US Credit Rating: America, the world’s largest economy, has received a major blow from the credit agency Fitch. Fitch has downgraded the US credit rating from AAA to AA+. Significantly, there has been a tremendous increase in debt on America and two months ago a big debt crisis was seen in the country. In such a situation, the credit rating has decided to reduce the rating in view of the condition of the economy. Fitch is one of the three big independent agencies in the world, which works to give ratings to different countries, looking at their financial condition.
America was on the verge of default
In May, the debt pressure on the US government had increased a lot. In such a situation, there was a huge tussle between the Biden government and the Republican Party to increase the debt limit. But later after the agreement between the two parties, the debt limit of the country was increased to $ 31.4 trillion. Due to this political instability and deadlock, America reached the verge of default for the first time. In such a situation, there has been a negative impact among those who have invested money in the US government. Its effect is also showing on Fitch’s credit rating.
White House said this
After the reduction of Fitch’s credit rating, the White House has expressed its disagreement about it, saying that Essengi has acted arbitrarily while giving the rating. Treasury Secretary Janet Yellen said that the agency has determined its rating by looking at old data, which is wrong. It is worth noting that in the year 2011, S&P Global Ratings had reduced the credit rating of America to AA+.
What will be the effect if the rating is reduced
Significantly, in terms of investment, the world’s largest economy America is considered the safest. The rating of agencies shows how safe it is to invest in a country. Investors can sell US Treasuries due to low credit rating. Along with this, the rating is used to decide the interest rate at many places. In such a situation, the interest rate can also increase.
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