Moody’s Investors Service affirmed the U.S.’s top rating for the second time in a week, rebutting Standard & Poor’s after it stripped the world’s largest economy of its top credit status.
The U.S. today retained its Aaa ranking with a negative outlook because the dollar’s status as the main reserve currency allows it to support higher debt levels than other countries and lawmakers last week took a “positive step” toward addressing the nation’s record deficits, Steven Hess, the senior credit officer at Moody’s in New York, said in a telephone interview.
“What we’ve said over the last few months is that we now see at least both parties having the same goal of deficit and debt reduction over the long term, even though more needs to be done,” Hess said. “More important to us than how contentious the process is, does it produce results? What we’re looking at is actual policies as opposed to the political debate.”
The dollar, the most widely held currency in central banks’ global foreign exchange reserves, helps support the U.S.’s top credit ranking, Moody’s said in a report today. The country also has an economy with “unparalleled size and diversity” as well as a government that’s characterized by “political and institutional stability.”
The U.S. lost its AAA ranking by S&P for the first time ever on Aug. 5. The rating firm cited the political failure to reduce record deficits and weakening “effectiveness, stability, and predictability of American policymaking and political institutions.” Billionaire Warren Buffett, the world’s most successful investor, said S&P erred and the U.S. should be rated “quadruple-A.”
Spending Cuts
Lawmakers agreed on Aug. 2 to raise the nation’s $14.3 trillion debt ceiling and put in place a plan to enforce $2.4 trillion in spending reductions over the next 10 years, less than the $4 trillion S&P had said it preferred.
“We don’t anticipate a scenario at the moment in which the U.S. would quickly return” to AAA, S&P analyst David Beers said in a conference call today. “Given the nature of the debate currently in the country, the polarization of views around fiscal policy right now, we don’t see anything immediately on the horizon that would make this the most likely scenario.” Read More
Selasa, 09 Agustus 2011
Moody’s Affirms U.S.’s Aaa Rating, Cites Dollar’s Role as Reserve Currency - Bloomberg
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