US outlook grade 'now negative'

3 August 2011

The outlook for the US credit rating has been reduced to negative, it has been confirmed.

Moody's Investors Service - which tracks debt covering more than 110 countries - made the announcement despite affirming the nation's AAA credit position, warning that downgrades could be possible in the future.

The agency noted such action could take place should the country's economy weaken considerably and if officials are unable to implement and follow debt reduction tactics.

Its move comes after US president Barack Obama signed an agreement to restrict spending and increase the country's borrowing limit.

Steven Hess, senior credit officer at Moody's in New York, told Bloomberg the deal will act as a positive step in the effort to reduce debt levels in the future.

The industry figure stated: "We do think more needs to be done to ensure a reduction in the debt to [gross domestic product] ratio, for example, going forward."

By Gary Cooper

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