Right answer, wrong reason.
August 16 (Reuters) — Fitch Ratings said on Tuesday it affirmed the United States’ top-notch credit rating at Triple-A, giving the world’s largest economy a reprieve after it was downgraded by Standard & Poor’s little more than a week ago.
Fitch said the outlook for the rating was stable.
“The affirmation of the US ‘AAA’ sovereign rating reflects the fact that the key pillars of US’s exceptional creditworthiness remains intact: its pivotal role in the global financial system and the flexible, diversified and wealthy economy that provides its revenue base,” Fitch said in its statement.
“Monetary and exchange rate flexibility further enhances the capacity of the economy to absorb and adjust to ‘shocks’.”
However, Fitch warned the outlook for the rating depended on the economy and the political process in Washington to reduce the public debt.
It said an upward revision to medium to long term projections for public debt either as a result of weaker than expected economic recovery or failure of the joint committee to agree on at least $1.2 trillion in deficit reduction would likely put the United States on negative outlook.
“The rating action would most likely be a revision of the rating Outlook to Negative, which would indicate a greater than 50 percent chance of a downgrade over a two-year horizon. Less likely would be a one-notch downgrade,” the statement said.