Moody’s allows US to keep AAA credit rating

Credit rating agency Moody's said yesterday that the US would be able to keep its sterling AAA credit rating for the time being, even as it lowered its outlook on US debt to "negative."

A "negative outlook" indicated the possibility that the rating agency would downgrade the country's sovereign credit rating in a year or two.

According Moody's, which had  put the US debt rating on review for a possible downgrade  last month, the political deal for raising the debt ceiling had led to virtual elimination of the risk of such a default.

Even in the absence of the risk of default, lawmakers need to take further steps and keep to their promises it added.

Moody's said the second round of spending cuts included in the debt ceiling deal needed to be enacted, even as it  voiced skepticism over the effectiveness of the so-called trigger mechanism.

"Should the new mechanism put in place by the Budget Control Act prove ineffective, this could affect the rating negatively," Moody's said in a statement.