NEW YORK: The US Congress will likely reach an agreement on a new debt limit before the Treasury exhausts extraordinary cash management measures to stave off a debt default, Moody's Investors Service said in a note on Thursday.

The US government hit its $31.4 trillion borrowing limit on Thursday, amid a standoff between the Republican-controlled House of Representatives and President Joe Biden's Democrats that could lead to a fiscal crisis in a few months.

US starts ‘extraordinary measures’ to avert debt default: Treasury

Moody's said it expects an agreement will be reached "very late or in an incremental fashion", potentially contributing to more volatility in financial markets.