Moody's says more budget measures needed to save U.S. rating


The United States must do more than the recently passed "fiscal cliff" measures if the country is to rescue its sovereign rating from its current negative outlook, rating agency Moody's Investors Service said on Wednesday.

The budget deal, meant to avert potentially devastating tax hikes and spending cuts, clarifies the medium-term deficit and debt trajectory of the federal government, Moody's said in a statement.

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"It does not, however, provide a basis for a meaningful improvement in the government's debt ratios over the medium term," Moody's said.

Moody's said it expects more budget measures in coming months "that would result in lower future budget deficits, which are necessary if the negative outlook on the government's bond rating is to be returned to stable. On the other hand, lack of further deficit reduction measures could affect the rating negatively."

Moody's rates the United States Aaa with a negative outlook.

(Reporting by Caryn Trokie, Luciana Lopez and Daniel Bases; Editing by Chizu Nomiyama)