One of the major global credit rating agencies says it is worried about the direction of political debate in Washington as members of Congress bicker over raising the legal limit on borrowing by the U.S. Government.

U.S. officials say Congress must raise the “debt ceiling” by August 2, or the country will be in danger of defaulting on its obligations.

In a report published Wednesday, Fitch Ratings calls a failure to raise the ceiling “unthinkable.”

The credit rating agency says U.S. currency plays a key role in the global economy, and Washington is the world's largest borrower. The report's author says failing to raise the “debt ceiling” would be a “crisis of governance” that would threaten the “fragile financial stability” in the United States and the rest of the world.

Fitch says even a brief default could earn Washington a lower credit rating that would raise interest rates on debt and increase the cost of managing the nation's debts.

In the meantime, the U.S. central bank says the economy expanded at a “steady pace” in most of the nation.

The report by the Federal Reserve, however, says bad weather along with higher food and fuel prices hampered consumer spending in roughly one-third of the United States. The Federal Reserve also said Japan's tsunami and other disasters cut deliveries of Japanese-made parts to factories in the United States, hurting auto production.

The informal assessment is based on interviews with businesses across the nation.