Moody's Investors Service lowered its outlook on the US credit rating to "negative" from "stable" on October 10, citing concerns over the escalating costs of rising interest rates and growing political polarisation in Congress.

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The decision drew swift criticism from President Joe Biden's administration, even though Moody's maintained the top Aaa credit score for US government debt, making it the last of the major credit rating agencies to do so.

Moody's released a statement highlighting the risk posed by "continued political polarisation" in Congress, emphasising the potential inability of lawmakers to reach a consensus on a fiscal plan to address the decline in debt affordability.

In response to the downgrade, Neeraj Gambhir, Group Executive & Head-Treasury, Markets and Wholesale Banking Products at Axis Bank, and Steven Englander, Global Head of G10 FX Research and North America Macro Strategy at Standard Chartered, shared their insights with CNBC-TV18.

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Englander noted that the market has already absorbed downgrades from other agencies, suggesting that Moody's downgrade may not significantly impact the US market. He emphasised that the longer-term impact depends on how inflation and fiscal policies unfold. In the short term, he anticipates a slowdown in the US economy, leading to relief as the 10-year yield approaches 4.50-4.25%.

Gambhir echoed concerns about a potential slowdown in the US economy and discussed the uncertainty surrounding US yields. He mentioned, "It's hard to take a definitive view on this because data is evolving and the situation keeps changing, but my guess is that somewhere between 4.5-4.75% is a good range for the short term. In the longer term, we will have to see how the inflation story settles down and how the growth story evolves from here."

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(with inputs from agencies)

For the entire discussion, watch the accompanying video

Also, catch all the updates on markets with CNBC-TV18.com's blog

(Edited by : Shweta Mungre)