Fitch Ratings sees little likelihood of a second, near-term cut to the United States' sovereign credit rating, according to comments made by James Longsdon during a media briefing in Frankfurt on Wednesday.
Longsdon noted that Fitch's 2023 action - when it trimmed the U.S. rating from AAA to AA+ - already took into account many of the fiscal pressures now on the table. He said that ratings commonly move once and then remain at the new level for an extended period rather than experiencing a rapid second downward adjustment.
"Ratings tend to move, then they sit for a while and they may be there for a long while, but they very rarely move fast again for a second time," Longsdon said. He added that "the risks are certainly more to the downside than to an upgrade," while emphasizing that the current rating reflects the circumstances that prompted the earlier downgrade.
Longsdon reiterated that a stable outlook from Fitch signals an absence of an expected downgrade in the near term. "A stable outlook means we're not expecting a downgrade in the next one to two years," he said.
The Fitch official also pointed to the greenback’s role in global finance as an important element of the agency’s evaluation. Despite recent volatility in the currency, Longsdon described the dollar as being "still clearly the predominant reserve currency." He said the underlying reserve data have been steady: "You look at the data points - it really has hardly moved at all."
The briefing referenced recent volatility in the dollar, noting a sharp single-day drop tied to remarks by President Donald Trump about the currency’s value. Fitch’s assessment follows other rating developments: in May of last year, Moody's Ratings became the last major credit agency to remove America's top score. Fitch itself last reviewed its rating in August with no change to the assessment.
Context and implications
Fitch’s position reflects the view that the combination of a prior downgrade and the dollar’s reserve status together reduce the immediate probability of an additional downgrade, while acknowledging downside risks remain.