In Bid to Save Face After Fitch Downgrade, Yellen Hawks US Treasuries as 'Safe, Liquid Asset'
22:17 GMT 02.08.2023 (Updated: 09:42 GMT 03.08.2023)
WASHINGTON (Sputnik) - The credit downgrade of the United States by Fitch Ratings does not dilute the standing of the country’s Treasury instruments as the world’s most dependable assets for investment, Treasury Secretary Janet Yellen said on Wednesday.
"At the end of the day, Fitch's decision does not change what all of us already know," Yellen said in a speech delivered at an event hosted by the Internal Revenue Service.
"The Treasury securities remain the world's pre-eminent, safe and liquid asset, and that the American economy is fundamentally strong."
On Tuesday, Fitch Ratings announced that it downgraded the credit rating of the United States from AAA to AA, citing fiscal deterioration over the next three years. The ratings agency also said it found troubling the debt limit standoffs between the two major political parties in Congress - Republicans and Democrats - and their last-minute resolutions to avoid debt default.
The downgrade has been criticized by the White House and several officials and political allies of the Biden administration, who questioned the timing of the move nearly three months after the resolution of the last debt crisis.
Many have attributed blame for the weakened US fiscal situation to Biden’s predecessor Donald Trump and cited the possibility that the Fitch decision may have been politically motivated.
2 August 2023, 12:58 GMT
Yellen joined in the criticism, saying Fitch's decision was puzzling in light of the economic strength seen in the United States.
"I strongly disagree with Fitch's decision and I believe it is entirely unwarranted. Its flawed assessment is based on outdated data and fails to reflect improvements across the range of indicators including those related to governance that we've seen over the past two and a half years," she said.
Yellen also said that despite the challenge Democrats have had in getting Republicans to raise the US debt ceiling, "we've seen both parties come together to pass legislation to resolve the debt limit as well as to make historic investments in our infrastructure in American competitiveness and fiscal priorities."
Fiscal prudence has been a priority for the Biden administration, with the president having signed debt limit legislation that included over $1 trillion in deficit reduction, Yellen added.
The US gross federal debt currently stands at $32.67 trillion.