Stocks traded lower Monday after Moody’s Ratings downgraded the US government credit rating on Friday, citing fiscal deficits and rising interest costs.
The US credit rating was dropped to Aa1 in the cut.
On Sunday, the House Budget Committee approved President Donald Trump’s “One Big Beautiful Bill” after it failed to pass muster on Friday.
“Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,” Moody’s explained in a statement.
The downgrade means the US has lost its last triple-A credit rating; Fitch Ratings similarly cut the US rating in 2023, and S&P Global Ratings cut the US rating in 2011.
Nevertheless, Moody’s praised the Federal Reserve for its conservative management of the country’s interest rate.
“While recent months have been characterized by a degree of policy uncertainty, we expect that the U.S. will continue its long history of very effective monetary policy led by an independent Federal Reserve,” the credit rating agency said in its statement.
The Fed chose to keep interest rates steady this month at 4.25 percent to 4.5 percent.
