The independence of the US Federal Reserve (Fed) is a key factor in determining the United States’ AA+ rating, Fitch Ratings said on Monday. Its comment came after President Donald Trump’s administration threatened Fed Chairman Jerome Powell with prosecution for his remarks last year before Congress regarding spending on renovating the central bank’s buildings, which Powell described as a pretext for the president to gain greater influence over the Fed’s activities and monetary policy.
Fitch, S&P Cite Fed Independence as Key to U.S. Credit Rating
Fitch said it would continue to monitor developments in governance, including institutional checks and balances, as well as the Fed’s ability to maintain low and stable inflation, when assessing the United States’ rating, according to Fitch Ratings analyst Richard Francis, as reported by Reuters.
S&P Global Ratings also cited the Fed’s credibility as important to its rating. Last October, S&P Global said that ratings could come under pressure if political developments affected the strength of US institutions or the Fed’s credibility. Trump has repeatedly called for Powell’s dismissal from the Fed, even though he appointed him to the position in 2018. He criticizes him primarily for not lowering interest rates as quickly as Trump would like.
A History of U.S. Credit Rating Downgrades Since 2011
Fitch downgraded the United States’ credit rating from the highest AAA rating to AA+ in August 2023, during the administration of Democratic President Joe Biden. The decision surprised investors and upset the US government. At the time, Fitch justified the move by citing the expected deterioration of the fiscal situation over the next three years and the high and still growing debt of the US government.
In 2023, Fitch became the second major rating agency to downgrade the United States from its highest rating. S&P was the first to do so in 2011, when Barack Obama, like Biden, was president from the Democratic Party. In May 2025, Moody’s also downgraded the United States’ top rating, at which time Donald Trump from the Republican Party was president.
Source: Reuters
