Fitch warns of downgrading US credit rating

According to VNA and foreign news, credit rating agency Fitch has put the US on watch for a possible downgrade due to the risk of default. Specifically, the US credit rating remains at the highest level of AAA, however, Fitch has placed the US on a negative credit rating watch list due to uncertainties over the public debt ceiling issue.

Trading session at the New York Stock Exchange (USA). (Photo: REUTERS)

This means that Fitch is considering a possible downgrade of the US credit rating. Fitch said that the current rating reflects the fact that increasing partisanship is preventing a consensus from being reached to raise the debt ceiling before the deadline. However, Fitch still hopes that the parties can reach a consensus on this issue.

Meanwhile, the administration of US President Joe Biden (G. Biden) affirmed that it still sees the opportunity to reach an agreement to raise the public debt ceiling with the Republican Party to avoid the risk of a debt crisis, as the parties continue to negotiate at the White House. The negotiation process is becoming urgent, as it is approaching June 1, the time when the US Treasury Department warns that the government may run out of ability to cover operating costs and is at risk of early default, with a debt of more than 31,000 billion USD.

Observers say there are few concrete signs that the two sides are looking for an agreement on how to raise the debt ceiling to allow the government to borrow more money and continue paying its bills after June 1. However, White House press secretary Karine Jean-Pierre has confirmed that negotiations are still going well. The official said that the two sides could absolutely reach a common agreement on raising the debt ceiling; warning that the prospect of the US defaulting on its debt would be catastrophic, with a series of other risks such as millions of unemployed people, affected pension benefits and the risk of economic recession.

US stock indexes continued to fall amid the deadlock in raising the debt ceiling, leading to concerns about the risk of the US economy defaulting. At the close of trading on May 24, the Dow Jones Industrial Average fell 255.59 points, or 0.77%. The S&P 500 Index fell 30.34 points, or 0.73%. Sharing the same trend, the Nasdaq technology index also fell 0.61% to 12,484.16 points.

The day before, the US stock market witnessed a sell-off in stocks as Democratic and Republican lawmakers tried to reach an agreement to raise the debt ceiling. Gold prices in New York also fell amid a stronger US dollar.

The US Federal Reserve (FED) forecasts a mild recession for the US economy this year. FED experts believe that tight financial conditions will lead to a mild recession starting later this year, after which the US economy may recover at a moderate pace. The FED forecasts that real gross domestic product (GDP) growth will slow in the next two quarters, then GDP will begin to decline slightly in the fourth quarter of 2023 and the first quarter of 2024.

According to nhandan.vn

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