MCLEAN: A US credit downgrade by Fitch was “entirely unwarranted,” Treasury Secretary Janet Yellen said Wednesday, pushing back against the second-ever decrease by a major ratings agency following repeated debt limit standoffs in Washington.
Her remarks came a day after the world’s biggest economy lost its top-tier credit rating as Fitch lowered it a notch from AAA to AA+, drawing fiery disapproval from the White House and Treasury.
The action was on the back of the United States’ growing federal debt burden and an “erosion of governance” resulting in multiple gridlocks over the debt ceiling, said Fitch Ratings on Tuesday.
But Yellen told an event in Virginia on Wednesday that “Fitch’s decision is puzzling in light of the economic strength we see in the United States.”
Citing US economy’s bounceback from the pandemic with a robust jobs market and cooling inflation, Yellen stressed that fiscal responsibility is a priority for herself and President Joe Biden.
“At the end of the day, Fitch’s decision does not change what all of us already know,” she said.
This includes the understanding that “Treasury securities remain the world’s preeminent safe and liquid asset,” she added.
Markets slumped following the Fitch downgrade, with bourses in Asia, Europe and the United States tumbling even as analysts said they did not forecast long-term implications.
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