Rating agency Standard and Poor's has cut its forecasts for euro zone economic growth and inflation, blaming the ''nosedive'' in financial conditions since the start of the year. Hayley Platt reports.
Markets sighed with relief after Janet Yellen urged caution. Another U.S. interest rate cut may not be quite so close. (SOUNDBITE) (German) HEAD OF CAPITAL MARKETS ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING: "Normally you have to read between the lines when someone like Mrs Yellen speaks. But recently the words have been very clear. America's Federal Reserve knows that China has a problem and interest rate hikes don't fit into this picture." Europe has a problem too. Euro zone economic sentiment fell for the third consecutive month in March. Consumers, and the construction and services sectors, all lost confidence So too it seems has ratings agency Standard and Poor's. It's cut its forecasts for the bloc's economic growth from 1.8 to 1.5 percent, saying financial conditions this year had "nose-dived." (SOUNDBITE) (English) CCLA, CHIEF INVESTMENT OFFICER, JAMES BEVAN, SAYING: "What we have seen is remarkably little appetite by consumers to spend money, what we have seen are indeed higher savings ratios and against that backcloth lower growth was always on the cards." S&P also cut its inflation projection to 0.4 percent, well down on the 1.1 percent it had previously expected. (SOUNDBITE) (English) CCLA, CHIEF INVESTMENT OFFICER, JAMES BEVAN, SAYING: "Despite the fact that there has been substantial quantitative easing the extra liquidity has not been translated into an increased appetite to borrow." German inflation does seem to have turned positive, according to new data. But only just. And even that was largely thanks to spending in the lead up to Easter when many Germans go on holiday