Fitch Says Federal Reserve Independence Is a Key Pillar of the U.S. Sovereign Rating
Fitch Ratings said on Monday that it considers the independence of the Federal Reserve to be a crucial supporting factor for the United States’ AA+ sovereign credit rating.
The credit rating agency said it will continue to assess developments in governance, including the strength of institutional checks and balances, as well as the Federal Reserve’s effectiveness in maintaining low and stable inflation, when evaluating the U.S. sovereign rating. The comments were made by Richard Francis, a senior director at Fitch Ratings, in written remarks.
The statement follows recent actions by the Trump administration, which threatened to indict Federal Reserve Chair Jerome Powell over congressional testimony he delivered last summer concerning a Federal Reserve building renovation project. Powell has described the move as a “pretext” aimed at exerting greater influence over the central bank and its monetary policy decisions.
Another major credit rating agency has also emphasized the importance of the Federal Reserve’s credibility in underpinning the U.S. sovereign rating. In a report published in October, it warned that U.S. ratings could come under pressure if political developments were to weaken the country’s institutions, undermine long-term policymaking, or compromise the independence of the Federal Reserve.
The agency added that it continues to view the Federal Reserve’s credibility as unmatched, noting that this credibility supports U.S. monetary policy flexibility and reinforces the role of the U.S. dollar as the world’s leading reserve currency—both of which are key components of the country’s sovereign credit profile.
When asked on Monday to comment on the latest developments, a spokesperson for the agency referred back to its previously published assessments.
