Although negotiations on the US debt ceiling are still struggling, global credit rating agency Moody’s is confident that the US will not fall into default.
William Foster, senior vice president of Moody’s, said in an interview with CNN on the 24th (local time), “We believe there will never be a scenario where we miss the X-date and fail to make interest payments.”
“If you don’t have confidence, it will change your outlook to negative,” he said.
Moody’s gives the US its highest rating of ‘Aaa’ and a rating outlook of ‘stable’.
However, Fitch, one of the world’s three largest credit rating agencies, presented the credit rating outlook of the United States at ‘AAA’, the highest rating, on this day, but presented a ‘negative’ credit rating outlook. Fitch said it reflected the uncertainty surrounding the debt ceiling and the possibility of default, and warned that it could be downgraded if Congress does not agree to raise the debt ceiling.
When asked why he was so sure the US would not fall into default, Foster said, “I have never defaulted,” citing the fact that there is no precedent.
He also noted that politicians from both parties in the United States said that “neither side intends to default.” On this day, Republican House Speaker Kevin McCarthy said, “I don’t think there will be a default.”
However, Vice President Foster is reported to have mentioned through other media that the credit rating will be downgraded if the US defaults.
In the United States, negotiations to raise the debt ceiling have stalled due to disagreements between the White House and Republicans over spending cuts for fiscal year 2024. The Republicans want to cut the budget, and the White House wants to keep the previous year’s size.
US President Joe Biden met with Republican House Speaker Kevin McCarthy three times from the 9th and 16th to the 22nd after the G7 summit in Hiroshima, but has not been able to find a point of agreement.
Treasury Secretary Janet Yellen has again warned of an ‘early June deadline’. “It seems almost certain that we will not make it past the beginning of June,” Minister Yellen said at a Wall Street Journal (WSJ) CEO committee meeting held in London on the same day, regarding default concerns.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.