Fitch Ratings, one of the three major credit rating agencies, has placed its AAA rating on he United States on “negative watch” as the looming deadline to raise the debt ceiling approaches.
The move by Fitch reflects the increasing uncertainty around the US government’s ability to meet all its financial obligations and pay its bills amid a political impasse in Washington. Fitch warned that a delay in raising the debt ceiling could lead to a “hard default,” which would be extremely damaging to the US economy and wider financial markets.
The agency is calling on Congress and the White House to reconcile their differences and pass a “sufficiently long lasting” deal to raise the debt ceiling, while warning that a failure to do so could lead to “significant negative credit consequences.”
At the same time, Fitch noted that the country’s “sound macroeconomic, fiscal and monetary policy frameworks” should allow it to continue to meet its debt obligations for at least the next few months, despite the political stalemate in Washington.
Time is running out for US lawmakers to agree on a deal to raise the debt ceiling – the cap on how much money the government is allowed to borrow – as the country risks its first-ever default this fall if the ceiling is not raised.
