Fitch indicates outcome of US elections may affect credit ratings

(MENAFN) Fitch Ratings has indicated that the outcome of the US elections in November could be a pivotal moment for federal policy and might have significant implications for credit ratings. The agency's report outlines that if President Joe Biden secures another term in the White House but faces a split Congress, it would likely result in the continuation of major policies. This scenario would suggest a degree of policy stability, as Biden's administration would maintain its existing direction despite potential legislative gridlock.

Conversely, a victory by former President Donald Trump could herald substantial changes in key policy areas, particularly if the Republican Party gains control of the Senate and retains or increases its majority in the House of Representatives. This shift would likely result in more pronounced policy adjustments, reflecting the differing priorities and approaches of the Trump administration. Fitch Ratings highlighted that there are seven critical policy areas where changes could significantly impact credit. These areas include trade protectionism, ongoing fiscal pressures, geopolitical positioning and foreign policy, climate policy rollback, financial deregulation, social policy reform, and restrictive immigration policies.

Fitch noted that trade protectionism and fiscal pressures have been trends observed across both parties, but a Trump administration would likely intensify these policies. Other areas would experience more dramatic shifts. Although the agency does not foresee broad-based direct effects on ratings in the short term, it cautioned that over the medium to long term, indirect consequences could become more substantial for specific sectors. These potential changes underscore the importance of the upcoming election in shaping the future economic and policy landscape of the United States.



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