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updated 8/16/2011 2:42:43 PM ET 2011-08-16T18:42:43

Fitch Ratings said Tuesday it will keep its rating on U.S. debt at the highest grade, AAA, and issued a "stable" outlook for the U.S., meaning it expects the rating to stay there.

That's better than the other two main ratings agencies. Moody's lists the U.S. debt at AAA but says its outlook is negative. And Standard & Poor's set off a maelstrom in the stock market last week after it took its rating on the U.S. down to the second-highest grade, AA-plus, for the first time.

Although it contradicts the Standard & Poor’s assessment of the U.S. economic outlook, the Fitch news was not entirely unexpected, said Bret Barker, portfolio manager at TCW in Los Angeles.

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“They were nowhere close to being as aggressive as Standard & Poor’s,” he said. “The market expected Moody’s and Fitch to maintain the AAA status.”

In Washington, the Obama administration welcomed the announcement from Fitch but said it would be important for Congress to take the steps called for in this month's budget agreement.

"The Treasury Department continues to believe that Treasury securities are AAA investments. Today's report underscores the importance of Congress taking additional actions to address our long-term fiscal challenges," Treasury spokesman Anthony Coley said.

The S&P cited bickering in Congress over the debt ceiling earlier this summer, as well as the country's rising proportion of debt, for its downgrade. But Fitch said that it decided to keep its rating because the "key pillars" of U.S. creditworthiness remain intact, including its "flexible, diversified and wealthy economy."

It also said that the country's flexibility in monetary policy gives it the ability to absorb economic shocks. The dollar's central role in the world economy allows the U.S. to hold a higher proportion of debt to gross domestic product.

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Fitch said it would revisit the rating after the congressional committee that is supposed to figure out how to cut government spending presents its findings, due by the end of November.

The ratings, which measure the possibility that the U.S. will default on its debt, have been a hot-button issue for weeks. Standard & Poor's downgrade Aug. 5 ignited a volatile week on Wall Street, with the Dow rising or falling by at least 400 points for four days. The government and some analysts have criticized the S&P's decision, calling it unjustified and criticizing the agency's mathematical assumptions.

S&P has defended the move, and some analysts have said the downgrade was a necessary wakeup call for a government that has been spending too much. S&P said its downgrade was based partly on political grandstanding this summer over the debt ceiling. S&P analysts also said they predict that the country's debt as a proportion of national ecoomic output will continue to rise.

S&P has also pointed out that its downgrade is only to the second-highest rating, saying that the psychological effects are deeper than the practical ones.

"It's like going from indigo to navy blue," S&P analyst John Chambers said in a call after the downgrade.

Moody's assigned a negative outlook to its rating of U.S. credit Aug. 2. Analysts there said they were uncertain how much a special congressional "supercommittee" will be able to agree on cutting spending.

The Associated Press and Reuters contributed to this report.

Video: Fitch keeps US debt at AAA


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