Fitch Ratings believes that McCarthy's resignation will not affect the credit rating of the United States, and it is expected that a government shutdown is inevitable.
Fitch Ratings International stated on Wednesday that the potential government shutdown following the resignation of Kevin McCarthy, Speaker of the United States House of Representatives, will not have an impact on the country's credit rating.
According to the Zhongtong Finance APP, Fitch Ratings stated on Wednesday that the potential government shutdown following the resignation of Kevin McCarthy, the Speaker of the United States House of Representatives, will not have an impact on the country's credit rating. The agency had downgraded the country's highest credit rating two months ago.
McCarthy reached a compromise with the Democrats last weekend to avoid a government shutdown, but this move led to a rebellion among the Republican hardliners, resulting in McCarthy losing his leadership position. Analysts, including Goldman Sachs, have expressed concerns that McCarthy's dismissal increases the risk of a government shutdown next month.
Richard Francis, Co-Head of Sovereign Ratings for the Americas at Fitch, stated in a media release, "We expect the politically charged policy surrounding government funding negotiations to remain tense, and a government shutdown later this year is inevitable. However, we do not believe that politically charged policy or the upcoming government shutdown in the coming weeks will affect the United States' 'AA+/Stable' sovereign rating."
McCarthy has served as the Speaker of the United States House of Representatives for nine months, and his dismissal came after the decision to allow a vote on funding extension. His successor may be discouraged from proposing a similar bill before the November 17 deadline.
In August, Fitch downgraded the United States' credit rating from AAA to AA+ due to the "steady deterioration" of governance standards, including fiscal and debt issues, over the past 20 years. This move partially led to a sharp drop in US bonds, pushing the yields of 10-year and 30-year Treasury bonds to their highest levels since 2007.
Meanwhile, credit rating agencies Standard & Poor's Global and Moody's have stated that they do not intend to comment on McCarthy's leadership change. Moody's is the only major rating agency that still assigns the highest rating to the United States. It warned at the end of September that its confidence was wavering in the face of a possible government shutdown.