Fitch announces downgrade of US sovereign credit rating?
Global Finance
2023-08-02 18:02:46
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On August 1, local time, Fitch, one of the world's three major international credit rating agencies, announced that it had downgraded the sovereign credit rating of the United States, from the original AAA rating to the current AA + rating, for example, everyone has their own "credit background," if your credit is good, every loan must be repaid, then occasionally encounter the situation of turnover, we will also rely on borrowing money to help, but, if you often do not repay the。The same is true for a country, the U.S. sovereign credit rating is a depiction of the U.S. "credit background," the highest AAA rating on behalf of the U.S. ability to repay debt is extremely strong, the risk of default is extremely low, the market can safely buy U.S. Treasury bonds.。There are two main reasons for Fitch's downgrade of the U.S. sovereign credit rating.。First, Fitch is concerned that the Biden administration's finances have begun to deteriorate and that the debt burden is high and will grow over the next three years.。Second, Fitch expects the Fed to raise interest rates by a further 25 basis points in September, and the U.S. economy may fall into a "mild" recession due to the current market environment.。Of course, Fitch's downgrade of the U.S. sovereign credit rating is not without warning.。As early as May 24 this year, Fitch announced that it would put the U.S. AAA rating on a "negative watch list" due to the standoff over the U.S. debt ceiling, and suggested a possible downgrade of the U.S. credit rating.。At the time, U.S. Treasury Secretary Yellen had repeatedly warned Congress that if Congress failed to adjust the federal government's debt ceiling to lead to a default on its debt, it would trigger an "economic disaster."。
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