Fitch warns it might downgrade US rating over debt

The Fitch ratings agency warned Tuesday that it might revise downward its notation for the United States from its current top "AAA" level if Congress does not reach agreement on raising the ceiling for the national debt. Fitch said that failure to raise the limit in time would lead to a formal revision by Fitch of its ratings of US debt instruments, but the agency also said the risk of a US default was extremely low. The legal ceiling for the US federal debt reached the limit of $16.394 trillion at the end of December. US lawmakers must agree on how to raise this limit within the next few weeks. Otherwise the United States will be unable to borrow to pay its bills. The United States found itself in a similar situation in August 2011. Deadlock within Congress caused one of the other top three rating agencies, Standard&Poor's, to downgrade its top-notch rating for US debt. Fitch commented that the method of placing a ceiling on the amount of debt was an inefficient and potentially dangerous way of achieving budget discipline. Fitch, together with the third agency which still rates US debt at "AAA", Moody's, has already warned that this notation has a "negative" outlook, meaning that it is likely to be downgraded in the medium term. Fitch warned that in the absence of a credible plan to reduce the debt and to support economic recovery, it would downgrade its rating for the United States later this year even if a crisis over the debt ceiling is averted in the short term.