Fitch's top sovereign ratings analyst stated on Thursday that any significant damage to the Federal Reserve's independence would have a negative impact on the US credit rating, with the most critical issue being whether there are any signs of a weakening in the US dollar's status as the world's premier reserve currency. This week, US prosecutors launched an investigation into Fed Chair Jerome Powell regarding cost overruns in the renovation of the Fed's headquarters, pushing the central bank's independence into the spotlight of public debate. James McCormack, Fitch's Global Head of Sovereign Ratings, said, "If a central bank were to become entirely politicized, that would constitute a negative credit impact." He emphasized that this principle applies to all countries, not just the United States. He pointed out, "For the US credit rating, the key issue is whether the market maintains a strong belief in the security of the dollar's reserve currency status, thereby acknowledging the financial flexibility that the US possesses." McCormack added, "Therefore, any event that could substantially weaken this belief would have a negative impact on the US credit rating. However, at present, there are no signs of such an event materializing."
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