Reuters reports:
Fitch made its decision to downgrade the U.S. credit rating due to fiscal concerns and a deterioration in U.S governance as well as polarization which was reflected in part by the Jan. 6 insurrection, Richard Francis, a senior director at Fitch Ratings, told Reuters on Wednesday.
In a move that took investors by surprise, Fitch downgraded the United States to AA+ from AAA on Tuesday, citing fiscal deterioration over the next three years and repeated down-to-the-wire debt ceiling negotiations that threaten the government’s ability to pay its bills.
That deterioration, as well as increased polarization in the country’s political climate, was reflected in the Jan. 6 insurrection, which the agency highlighted in discussions with the Treasury. Fitch held meetings with Treasury ahead of the downgrade.
From the Treasury Department:
Secretary of the Treasury Janet L. Yellen issued the following statement on the recent decision by Fitch Ratings.
“I strongly disagree with Fitch Ratings’ decision. The change by Fitch Ratings announced today is arbitrary and based on outdated data. Fitch’s quantitative ratings model declined markedly between 2018 and 2020 – and yet Fitch is announcing its change now, despite the progress that we see in many of the indicators that Fitch relies on for its decision.
“Many of these measures, including those related to governance, have shown improvement over the course of this Administration, with the passage of bipartisan legislation to address the debt limit, invest in infrastructure, and make other investments in America’s competitiveness.
“Fitch’s decision does not change what Americans, investors, and people all around the world already know: that Treasury securities remain the world’s preeminent safe and liquid asset, and that the American economy is fundamentally strong.”
Exclusive: Fitch highlighted Jan. 6 insurrection in talks with Treasury ahead of US downgrade https://t.co/8ps98nNt9C pic.twitter.com/tmwt9FCVX7
— Reuters (@Reuters) August 2, 2023
