Moody’s cuts USA outlook to negative, citing higher interest rates and deficits

Moody’s Investors Service lowered its ratings outlook on the United States’ government to negative from stable, pointing to rising risks to the nation’s fiscal strength.

The ratings agency has affirmed the long-term issuer and senior unsecured ratings of the U.S. at Aaa.

“In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues,” the agency said. “Moody’s expects that the US’ fiscal deficits will remain very large, significantly weakening debt affordability.”

Brinkmanship in Washington has also been a contributing factor, Moody’s said.

“Continued political polarization within US Congress raises the risk that successive governments will not be able to reach consensus on a fiscal plan to slow the decline in debt affordability,” the ratings agency said.

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