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Category: Money

Moody’s Maintains AAA Credit Rating to US

Written on August 03, 2011 by Japhet Writ

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Moody's retained US' sovereign AAA rating, but with Negative Outlook.

Last Tuesday, agency – Moody’s – said that US will retain its AAA rating for the time being. However, its was down to “negative.” The Negative indicates the possibility that Moody’s would downgrade the country’s credit rating within a year or two.

Moody’s move was made after the Washington debate on whether to raise the country’s $14.3 billion . The rating agency also added that the political deal to raise the has now “virtually eliminated the risk of such a default.”

But even though the risk of default is gone, Moody’s pointed out that lawmakers must take additional steps and keep their promise.

“Should the new mechanism put in place by the Budget Control Act prove ineffective, this could affect the rating negatively.”

The rating agency also expects to see the debt to stabilize at 73% of GDP by middle of the decade, then decline. Interest rates must also remain under control. If borrowing costs for the US government also skyrocket unprecedentedly, that would also downgrade the country’s credit rating.

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