Moody's downgrades Japan's rating to negative

TOKYO — Ratings agency Moody's on Tuesday said it had changed its outlook on the government of Japan's Aa2 rating to "negative" from "stable" on concerns current policy may not be adequate to contain huge debt.

"The rating action was prompted by heightened concern that economic and fiscal policies may not prove strong enough to achieve the government's deficit reduction target and contain the inexorable rise in debt, which already is well above levels in other advanced economies," Moody's said.

Moody's cited the pressures caused by Japan's high budget deficit, persistent deflation and an aging society combined with "uncertainty over the ability of the ruling and opposition parties to fashion an effective policy reform response."

Last month ratings agency Standard & Poor's cut Japan's credit rating for the first time since 2002.

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