Moody’s: More action needed to avoid a downgrade

Moody’s Investors Service announced Thursday that a compromise to avoid the “fiscal cliff” is not enough to protect the nation’s AAA rating, calling for further action from policymakers.

It said a deal over raising the debt limit, which could include new spending cuts, tax hikes and entitlement reforms, could determine whether the nation’s credit rating is downgraded.

“The debt trajectory resulting from this process is likely to determine whether the Aaa rating is returned to a stable outlook or downgraded to Aa1,” the agency said.