Fitch warns political pressure on Fed could threaten US sovereign rating

The independence of the US Federal Reserve remains a very crucial pillar supporting America’s AA+ sovereign credit rating, Fitch rating says. The global credit rating agency highlights that political interference in the central bank could pose risks to the country’s creditworthiness.

In emailed comments, Richard Francis, senior director at Fitch Ratings, said the agency will continue to closely track the evolution of US governance, including the strength of institutional checks and balances, as well as the Federal Reserve’s ability to deliver low and stable inflation, both of which are critical factors in its assessment of the US sovereign rating.

The remarks come amid rising political scrutiny of the Federal Reserve under the Trump administration. The White House has recently threatened legal action against Fed Chair Jerome Powell over his congressional testimony last summer related to a central bank building project. Powell has described the move as a “pretext” aimed at exerting greater influence over the Fed and its monetary policy decisions.

Fitch’s warning echoes similar concerns raised by S&P Global Ratings. In an October report, S&P said the credibility and independence of the Federal Reserve remain major strengths underpinning the US credit profile but cautioned that America’s sovereign rating could face pressure if political developments undermine the strength of key institutions or weaken the Fed’s autonomy.

“We continue to view the credibility of the Fed as unparalleled,” S&P said, noting that the central bank’s standing supports US monetary flexibility and the dollar’s role as the world’s leading reserve currency, both of which are critical components of the country’s sovereign rating.

When asked for comment on the latest developments, an S&P Global spokesperson referred to the agency’s previous assessments.

Together, the comments highlight growing concerns among global ratings agencies that political encroachment on the Federal Reserve could become a material risk factor for the United States’ fiscal and financial stability.