Moody's lowered the rating of the USA. The reason for growing debt and lack of prospects

The Moody's Rating Agency reduced the highest credit rating on Friday to the US government, citing the failures of subsequent governments in stopping the growing wave of debt – the Associated Press agency said.

Moody's reduced the rating from AAA to AA1, emphasizing, however, that the United States has retained their exceptional credit force and the role of the American dollar as a global reserve currency.

The agency pointed out in a statement that the fiscal proposals being considered will probably not lead to a permanent, many years of reduction of the deficit and estimated that the US public debt will increase to approx. 134 percent. GDP until 2035 compared to 98 percent in 2024

“The blocked political system was unable to cope with huge deficits. Republicans reject tax increases, and Democrats are reluctant to cut expenses” – reminded the Associated Press.

Analysts indicate that the decision to reduce the US credit profile will probably increase the profitability of tax bonds to reflect a greater risk. This may weaken the attitude to having American assets, including action.

Immediately after information about the rating reduction, the profitability of 10-year treasury bonds increased by 3 base points in deposited trade, to 4.48 percent.

On Friday, Republicans from the House of Representatives did not push through the tax breaks and expenditure packets in the budget committee. A small group of republican legislators, insisting on larger cuts, opposed the project together with all representatives of Democrats.

Moody's is another of the three main rating agencies that reduced the credit assessment of the federal government. Standard & Poor's lowered the federal debt rating in 2011, and Fitch Ratings made a similar decision in 2023 (PAP)

JBW/ ZM/ PR/