Leading ratings agency Moodys Investors Service has lowered its outlook for Japans debt rating from stable to negative over concerns that political disagreements will prevent substantive action on the countrys swelling debt burden, according to Bloomberg. On Tuesday, Moodys warned that the Japans economic and fiscal policies may not prove strong enough to achieve the governments deficit reduction target and contain the inexorable rise in debt. The current rating from Moodys for Japan is Aa2.
The move comes on the heels of rival Standard & Poors downgrade of Japans rating to the fourth highest level, one notch below Moodys current rating. Meanwhile, Fitch Ratings reaffirmed its AA- rating for Japan, and confirmed that the outlook for the country remains stable. In the statement, Moodys said the nation is facing chronic deflationary pressures, and warned, The risks are predominantly on the downside unless there are very good results for the tax reform program and also good results for the governments efforts to revitalize economic growth.