Fitch Casts Doubt on the Speed of US Debt Ceiling Resolution

Fitch Ratings expressed skepticism on Tuesday that the debate over the U.S. debt ceiling will be resolved quickly, despite a unified government under President-elect Donald Trump. The agency highlighted the narrow Republican majority in the House of Representatives and ongoing intra-party disputes over spending policies as potential obstacles. Fitch noted that important fiscal policy decisions, such as suspending or raising the debt limit in 2025, may not be implemented swiftly. The rating agency pointed to long-standing weaknesses in the federal government's budgeting process as a contributing factor to the anticipated delays. Fitch emphasized the fiscal policy challenges facing the U.S. and stated that while policymakers are expected to eventually reach an agreement on the debt ceiling and other fiscal matters, such as the extension of the 2017 tax cuts set to expire this year, the path to those decisions is likely to be fragmented and fraught with difficulties. Fitch had previously downgraded the U.S. government's credit profile following a debt ceiling crisis in 2023.