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US Treasury chief downplays Moody’s downgrade, calls it ‘irrelevant’

  • By Al Mayadeen English
  • Source: NBC News
  • 18 May 2025 22:46
4 Min Read

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)
    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%.

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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.

Trump administration slams downgrade as politically motivated

The rating cut triggered swift backlash from President Donald Trump’s administration. White House spokesperson Kush Desai dismissed Moody’s decision as inconsistent and politically selective.

“If Moody’s had any credibility, they would not have stayed silent as the fiscal disaster of the past four years unfolded,” Desai told CBC News. He added that the Trump administration is committed to reversing the trend through aggressive fiscal reforms, including what he called “The One, Big, Beautiful Bill to get our house back in order.”

Communications Director Steven Cheung also questioned the impartiality of Moody’s chief economist, Mark Zandi.

“An Obama advisor and Clinton donor who has been a Never Trumper since 2016,” Cheung said. “Nobody takes his ‘analysis’ seriously. He has been proven wrong time and time again.”

Moody’s remains one of the world’s top credit rating agencies, and its assessments carry considerable weight in global financial markets. A downgrade can lead to increased borrowing costs for the government, affect investor confidence, and potentially influence monetary policy decisions.

  • United States
  • Moody's
  • US Treasury
  • Scott Bessent

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