US Treasury chief downplays Moody’s downgrade, calls it ‘irrelevant’
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Moody’s downgrades US credit to AA1, citing debt concerns. Treasury chief Scott Bessent dismisses the move, saying global investors remain confident.
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Treasury Secretary Scott Bessent testifies before the House Committee on Appropriations, Subcommittee on Financial Services and General Government, oversight hearing at Capitol Hill in Washington, Tuesday, May 6, 2025 (AP)
US Treasury Secretary Scott Bessent dismissed Moody’s recent decision to downgrade the United States government’s credit rating, calling the agency a “lagging indicator” and downplaying the significance of the move in global financial markets.
Speaking to NBC News on Sunday, Bessent questioned the relevance of Moody’s ratings, stating: “I think that Moody’s is a lagging indicator … I think that’s what everyone thinks of credit agencies.”
On Friday, Moody’s lowered the US government's long-term issuer and senior unsecured ratings from AAA to AA1, citing a concerning rise in national debt and interest obligations. The agency noted that these fiscal pressures had reached levels “significantly higher” than those seen in other similarly rated economies, even as it shifted the outlook from negative to stable.
Bessent blames it on Biden
Bessent attributed the downgrade to the spending legacy of former President Joe Biden’s administration, while asserting that foreign investors remain confident in US markets.
“If we go back to your initial question on the Moody’s downgrade, who cares? Qatar doesn’t. Saudi [Arabia] doesn’t. UAE doesn’t... They’re all pushing money in,” he said.
This marks the third downgrade of the US credit rating by a major agency in recent history; Fitch Ratings downgraded the US in 2023, while S&P cut its rating in 2011. The downgrade comes as the US national debt hits $36 trillion, with interest rates currently ranging between 4.25% and 4.5%.
Moody's downgrades US credit rating
Moody’s Investors Service has downgraded the United States’ long-term issuer and senior unsecured ratings from AAA to Aa1, citing persistent fiscal challenges and rising debt levels. The agency also revised the country’s outlook from negative to stable.
“This one-notch downgrade on our 21-notch rating scale reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns,” Moody’s stated. The agency emphasized that the US fiscal trajectory continues to deteriorate, both "compared to its own past" and "compared to other highly-rated sovereigns."
Looking ahead, Moody’s projects the federal deficit will expand to nearly 9% of GDP by 2035, up from 6.4% in 2024. This growth is expected to be driven by increasing interest obligations, rising entitlement spending, and limited revenue expansion. The US debt-to-GDP ratio is also forecast to climb to 134% by 2035, a sharp increase from 98% in 2024.
Despite the downgrade, Moody’s noted that the long-term prospects of the US economy remain intact, even though near-term growth may slow.
