Fitch downgrades US rating outlook to "negative"

　　The international rating agency Fitch issued a report on July 31, downgrading the outlook for the US sovereign credit rating from “stable” to “negative” while maintaining the US long-term sovereign credit rating as “AAA”.

　　Fitch said it downgraded the outlook for the US sovereign credit rating to "negative" to reflect the continued deterioration of US public finances and the absence of a reliable fiscal consolidation plan.

The picture shows tourists on Huntington Beach, California, USA.

　　Fitch believes that before the new crown epidemic, high debt and deficits have "corroded" the sovereign credit of the United States. Under the impact of the epidemic, the United States introduced fiscal stimulus and other measures to further push up debt. The November presidential election is approaching, and the direction of fiscal policy depends to a certain extent on the results of the election, and there is a risk of continued policy deadlock.

　　"Financing flexibility is supported by the intervention of the Federal Reserve (Board) to repair the liquidity of the financial market, but it cannot completely eliminate the persistence risk of medium-term debt," the report said. "There are increasing risks, and U.S. policymakers will not be able to fully Consolidate public finances to stabilize public debt after the impact of the epidemic."

　　The report predicts that by 2021, the proportion of US government debt to GDP may exceed 130%. This data is expected to be stable from 2023, but on the premise that interest rates remain low. However, "when growth and inflation begin, there is uncertainty about whether very low market interest rates can be maintained."

　　In response to the impact of the epidemic, the US Congress has introduced an economic relief bill totaling US$2.2 trillion (approximately 15.3 trillion yuan) to issue cash checks to low-income Americans and provide additional loans for small and medium-sized enterprises severely affected by the epidemic. project. At the same time, the Federal Reserve lowered the target range of the federal funds rate to an ultra-low level of zero to 0.25%, and launched unlimited quantitative easing.

　　On July 29, the US Federal Reserve issued a statement after the conclusion of its monetary policy meeting, stating that the ongoing public health crisis will severely affect economic activity, employment and inflation in the short term, and pose considerable risks to the economic outlook in the medium term. The US economic outlook will largely depend on the progress of the epidemic.

　　The Associated Press reported that the U.S. Congressional Budget Office predicts that in the current fiscal year ending September 30 this year, the fiscal deficit will reach an unprecedented $3.7 trillion (25.8 trillion yuan). In the last fiscal year, the deficit was US$984.4 billion (6.9 trillion yuan). In June this year alone, the deficit reached 864 billion US dollars (6 trillion yuan), the highest monthly level. (Chen Lixi) (Xinhua News Agency Special Feature)