The international rating agency Moody’s has downgraded the US long-term credit rating from the highest level of AAA to AA1, citing the rising public debt and record interest costs that exceed those of other countries in the same rating category.
This was stated in an official statement by Moody’s on Friday, 16 May.
“The US administration and Congress have been unable to reach an agreement to stabilise the growing annual budget deficit and rising debt service costs,” the agency said.
According to Moody’s, the US public debt could reach 134% of GDP by 2035, up from 98% in 2024. In the last year alone, the fiscal deficit increased by 13.5%, exceeding $1 trillion. Some US media outlets have noted that the Trump administration’s tariffs have somewhat reduced the deficit, but the new administration’s economic policies are causing investors to be concerned.
At the same time, Moody’s stressed that the decision was not a criticism of US institutions or the Fed’s monetary policy. The United States continues to enjoy “exceptional credit strengths” due to its size, economic dynamism and status as the world’s main reserve currency.
Until now, Moody’s has been the only one of the Big Three agencies to hold the highest rating for the US. Standard & Poor’s downgraded it back in 2011, and Fitch downgraded it in August 2023.
