Fitch puts US credit rating on watch – RT Business News
The U.S. government faces a $31 trillion debt default if lawmakers fail to raise the federal borrowing limit
Rating agency Fitch has warned that the United States could soon lose its AAA rating, saying Washington may not be able to pay its bills within days amid “the debt ceiling on the brink” in Congress.
The company said it placed the United States on “Note Watch Negative” Wednesday night, pointing to the fast approaching debt ceiling, which the Treasury Department says could be reached as early as June 1.
While Fitch noted that he expects lawmakers to strike a deal on the borrowing limit before it’s too late, he added that the government could still “begin to miss payments on some of its obligations”, Which one is “unlikely to be compatible with a ‘AAA’ rating.”
“Similarly, avoiding default by unconventional means such as minting a trillion dollar coin or invoking the 14th Amendment is unlikely to be consistent with an ‘AAA’ rating and could also be subject to dispute. judicial”, notify the agency.
A rating downgrade would have major implications for the US economy and the country’s global financial situation, which could mean higher borrowing costs, lower investor confidence and greater economic volatility, as financial markets are very sensitive to changes in credit ratings.
Republicans and Democrats have struggled to reach an agreement to raise the debt ceiling for weeks, prompting Treasury Secretary Janet Yellen to warn that the United States “highly probable” default if Congress does not act quickly. The move would be a first in American history, as the government has never defaulted on its debt, which has soared to over $31 trillion.
The Treasury took “extraordinary measures” to meet federal obligations since January, but says he will run out of options by early June.
Debt ceiling talks between President Joe Biden and House Speaker Kevin McCarthy continued this week, but reportedly reached a climax. “speed bump” Wednesday, according to an unnamed Democratic staffer quoted by NBC. The official said negotiations have stalled as Republicans seek to drastically cut spending, with McCarthy previously saying his party wants next year’s budget to be lower than 2023’s.
Speaking to reporters later Wednesday, the Speaker of the House said both sides were “still far from each other” but expressed hope that a deal could be reached before next week, insisting “We’re not going to default.”
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