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HomeTop Global NewsMoody's cuts U.S. outlook to negative, citing higher interest rates and deficits

Moody’s cuts U.S. outlook to negative, citing higher interest rates and deficits

The White House is seen at dusk on September 30, 2023 in Washington, DC.

Samuel Corum | Getty Images

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.

Moody’s move to cut its outlook arrives as Congress faces the looming threat of a government shutdown once more. For now, the government is funded through Nov. 17, but lawmakers in Washington remain at loggerheads over a bill ahead of the deadline.

The White House did not immediately respond to a request for comment from CNBC on the downgrade.

This is breaking news. Please check back for updates.

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