Speaking to CNBC’s Karen Tso, IMF Managing Director Kristalina Georgieva said Europe’s economic performance was strengthening and inflation was clearly on a downward trajectory. “We come with this relatively good news and with a warning: There is no time to waste for the euro zone to concentrate on productivity,” Georgieva said. “Right now, Europe looks like an ideas supermarket for the United States,” she added. Kristalina Georgieva, chief executive officer of the World Bank Group, arrives to a briefing at the annual meetings of the International Monetary Fund (IMF) and World Bank in Washington, DC, US, on Friday, April 19, 2024. Bloomberg | Bloomberg | Getty Images

The head of the International Monetary Fund on Thursday called on Europe to achieve the full potential of its prized single market, lamenting what she described as a situation that makes the region look like “an ideas supermarket” for the U.S.

Speaking to CNBC’s Karen Tso, IMF Managing Director Kristalina Georgieva said Europe’s economic performance was strengthening and inflation was clearly on a downward trajectory.

Indeed, alongside the IMF observing an uptick in consumption, Georgieva said expected interest rate cuts from the European Central Bank would likely help investment in the euro zone and bolster the 20-member bloc’s economic performance.

“We come with this relatively good news and with a warning: There is no time to waste for the euro zone to concentrate on productivity,” Georgieva said.

“That means two things. One, to achieve the full potential of the single market. It is not there yet. We want to see more labor market flexibility in Europe, we want to see [a] deepening [of] the financial markets, integrating them [and] we want to see the banking union, the capital union in place,” she continued.

“And two, we want to see much more attention to innovation, investing in [research and development], making it possible to have business based on innovation in Europe to materialize in Europe. Right now, Europe looks like an ideas supermarket for the United States,” Georgieva said.

“A lot of what is invented here ends up being commercially viable and on scale over there and when you look at the main obstacle? [It is] 27 countries not yet integrated in a single market.”

U.S. productivity

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General view of the Bank Of England building in London.  Sopa Images | Lightrocket | Getty Images

LONDON — The Bank of England on Thursday opted to keep interest rates steady at its June meeting, confirming market expectations even after U.K. inflation hit its 2% target.

It keeps the central bank’s key rate at a 16-year high of 5.25%, where it has been held since August 2023.

Seven members of the Monetary Policy Committee voted to hold, while two favored to cut by 25 basis points, the same as during the bank’s May meeting.

In a statement, the MPC noted inflation had reached the central bank’s target and said indicators of “short-term inflation expectations” and wage growth had eased.

It was “very difficult to gauge the evolution of labour market activity” because of uncertainty around estimates from the Office for National Statistics, the MPC added.

In a repeat of previous messaging that some analysts had thought it may drop, it again said monetary policy needs to “remain restrictive for sufficiently long to return inflation to the 2% target sustainably.”

Inflation data on Wednesday showed headline price rises cooled to 2% in May, meeting the central bank’s target ahead of the U.S. and the euro zone, despite the U.K. suffering a sharper spike inflation over the last two years.

However, economists say the U.K.’s continued high rates of services and core inflation suggest the potential for ongoing upward pressure.

The U.K. decision to hold comes just two weeks out from a general election in which the state of the economy and proposals for rebooting sluggish growth have emerged as a key battleground.

Despite speculation that the politically-independent BOE might act more cautiously as a result of the upcoming vote, Governor Andrew Bailey had emphasized that it would remain focused on its own data.

Attention will now turn to the prospects of an August rate cut. Money market pricing indicated just a 40% chance of this following Thursday’s statement.

The British pound extended losses against the U.S. dollar, trading 0.2% lower at $1.2685 at 12:24 p.m. in London.

Other central banks in Europe have already begun to ease monetary policy, including the Swiss National Bank, European Central Bank and Sweden’s Riksbank, as they seek to reboot economic growth.

That’s even as the U.S. Federal

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The Swiss National Bank trimmed its key interest rate by 25 basis points to 1.25% in its second cut of the year. Two thirds of economists polled by Reuters had anticipated the SNB would decide in favor of a 25-basis-point-cut to 1.25%. The country’s inflation flatlined at 1.4% in May after a bump up in April and is expected to average the same level across full-year 2024, according to the SNB’s latest projections. A view of the headquarters of the Swiss National Bank (SNB), before a press conference in Zurich, Switzerland, March 21, 2024.  Denis Balibouse | Reuters

The Swiss National Bank on Thursday trimmed its key interest rate by 25 basis points to 1.25%, continuing cuts at a time when sentiment over monetary policy easing remains mixed among major economies.

Two thirds of economists polled by Reuters had anticipated the SNB would decide in favor of a 25-basis-point-cut to 1.25%.

The Swiss franc weakened in the wake of the announcement, with the Euro gaining 0.3% and the U.S. dollar up 0.5% against the Swiss currency at 8:55 a.m. London time.

Following the Thursday decision, the Swiss central bank pegged its conditional forecast for inflation at 1.3% for 2024, 1.1% for 2025 and 1.0% for 2026. The figures assumes a SNB interest rate of 1.25% over the prediction period.

The country’s inflation flatlined at 1.4% in May after a bump up in April and is expected to average the same level across full-year 2024, according to the SNB’s latest projections.

The Swiss bank said it now anticipates economic growth of around 1% this year and around 1.5% in 2025, anticipating slight increases in unemployment and small declines in the utilization of production capacity.

“Over the medium term, economic activity should improve gradually, supported by somewhat stronger demand from abroad,” the SNB said.

In a June 14 note, analysts at Nomura had characterized a likely cut as a “finely balanced decision” and signaled that “underlying inflation momentum has remained weak which is likely to increase the SNB’s confidence that inflation will converge to the mid-point of its inflation target.”

Switzerland already has the second-lowest interest rate of the Group of Ten democracies by a wide margin, following Japan. It became the first major economy to cut interest rates back in late March and was earlier this month

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Participants during the snowboarding activity with the Hoods to Woods Foundation at Big Snow American Dream in East Rutherford, New Jersey on June 13, 2024. Danielle DeVries | CNBC

EAST RUTHERFORD, N.J. — For 16-year-old Zyshawn Gibson, snowboarding down the indoor ski park at Big Snow American Dream in East Rutherford, New Jersey, was a welcome change of scenery.

Gibson’s participation at the ski park was made possible through the Hoods to Woods Foundation, a nonprofit based in New York and New Jersey that “promotes awareness of the outdoors to inner city children through snowboarding,” according to the organization’s website. Through its 15-year history, Hoods to Woods has helped hundreds of underserved youth such as Gibson develop a new interest and outlet through snowboarding, co-founder Omar Diaz estimated.

“It keeps me out of the house,” Gibson told CNBC from a lounge room in the Big Snow complex. “It’s a different thing to do, instead of being outside in the streets and being in danger and stuff like that.”

Hoods to Woods, the brainchild of Diaz and co-founder Brian Paupaw, is dedicated to providing new opportunities for teenagers and young adults who come from similar backgrounds to their own. The group hosts weekslong programs across urban areas in the two states.

Participants during the snowboarding activity with the Hoods to Woods Foundation at Big Snow American Dream in East Rutherford, New Jersey on June 13, 2024.  Danielle DeVries | CNBC

The organization is just one of several across the United States working to bringing people of color to outdoor activities, including winter sports — spaces where they are often marginalized and underrepresented.

A 2019-2020 participation study released by Snowsports Industries America showed that the participation for white Americans remained at 67.5%. In comparison, Asians accounted for 7.7% of the participants, while Black people made up 9.2% and Hispanics came in at 14%.

Similarly, a demographics study updated by the National Ski Areas Association in 2023 found that white participants represented 88.1% of guests.

One factor that contributes to this divide is the high barrier to entry for these winter sports, given the average expenses when it comes to equipment and transportation. The same study from Snowsports Industries America revealed that more than half of winter sports participants in 2019 through 2020 made over $75,000 a year.

Breaking down barriers

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U.K. inflation fell to the Bank of England’s target of 2.0% in May, the Office for National Statistics said Wednesday. The headline reading declined from 2.3% in April, bringing it in line with the central bank’s 2% target. The print is the last key economic measure ahead of national elections in July. Shoppers on the high street in the Kingston district of London, U.K. Bloomberg | Bloomberg | Getty Images

U.K. inflation fell to the Bank of England’s target of 2.0% in May, the Office for National Statistics said Wednesday, in the last print of the key economic measure ahead of national elections in July.

The headline reading declined from 2.3% in April and came in line with the 2% expectations of economists polled by Reuters.

Sterling rose slightly shortly after the release, trading at $1.2721 by 7:33 a.m. London time.

Services inflation — which is closely watched by the BOE given its dominance within the U.K. economy and its reflection of domestically-generated price rises — was at 5.7% in May, versus 5.9% during the previous month.

Core inflation, excluding energy, food, alcohol and tobacco, dipped to 3.5% from 3.9% in April.

Falling food prices were the largest contributor to the declines, while car fuel costs continued to see an upward pressure, the ONS said.

Unseasonably bad weather led to the slowest increase in grocery sales in two years, new figures from U.K. market research firm Kantar showed Tuesday. Grocery sales rose 1.0% in the four weeks to June 9, marking the sixteenth consecutive monthly decline in food inflation, according to the index.

Bank of England decision in focus

While the latest print brings inflation in line with the BOE’s target, Azad Zangana, senior European economist and strategist at Schroders, cautioned that upward pressure could return in the second half of the year, as the U.K. phases out its energy price cap.

“From the third, fourth quarter onwards, you might start to see a bit more upward pressure coming through as the Bank of England has warned,” he told CNBC’s “Squawk Box.”

Zangana suggested that the Bank could even “surprise” the market with a rate cut this week, when it next meets on Thursday. The Bank is otherwise widely expected to hold rates steady at 5.25%, where they have been since August 2023 — back

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Economist Claudia Sahm has shown that when the unemployment rate’s three-month average is half a percentage point higher than its 12-month low, the economy is in recession. Sahm said the Fed is taking a big risk by not moving now with gradual cuts. Fed officials last week sharply lowered their individual forecasts for rate cuts this year, going from three expected reductions at the March meeting to one this time around. Economist Claudia Sahm on CNBC’s The Exchange.

The Federal Reserve is risking tipping the economy into contraction by not cutting interest rates now, according to the author of a time-tested rule for when recessions happen.

Economist Claudia Sahm has shown that when the unemployment rate’s three-month average is half a percentage point higher than its 12-month low, the economy is in recession.

As the jobless level has ticked up in recent months, the “Sahm Rule” has generated increasing talk on Wall Street that what has been a strong labor market is showing cracks and pointing to potential trouble ahead. That in turn has generated speculation over when the Fed finally will start reducing interest rates.

Sahm said the central bank is taking a big risk by not moving now with gradual cuts: By not taking action, the Fed risks the Sahm Rule kicking in and with it a recession that potentially could force policymakers to take more drastic action.

“My baseline is not recession,” Sahm said. “But it’s a real risk, and I do not understand why the Fed is pushing that risk. I’m not sure what they’re waiting for.”

“The worst possible outcome at this point is for the Fed to cause an unnecessary recession,” she added.

Flashing a warning sign

As a numeric reading, the Sahm Rule stood at 0.37 following the May employment report from the Bureau of Labor Statistics that showed the unemployment rate rising to 4% for the first time since January 2022. That’s the highest the Sahm reading has been on an ascending basis since the early days of the Covid pandemic.

The value essentially represents the percentage point difference from the three-month unemployment rate average compared to its 12-month low, which in this case is 3.5%. A reading of 0.5 would represent an official trigger for the rule; a couple more months of 4% or better

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Retail sales rose 0.1% in May, below the 0.2% the Dow Jones estimate. Excluding autos, sales declined 0.1%. Moderating gas prices helped hurt receipts at gas stations, which reported a 2.2% monthly decline. Following the retail data, traders in the fed funds futures market upped their bets that the Fed would cut interest rates this year. A worker assists with check-out at a Costco store in Teterboro, New Jersey, US, on Wednesday, Feb. 28, 2024.  Stephanie Keith | Bloomberg | Getty Images

Retail spending was weaker than expected in May as consumers continued to wrestle with stubbornly higher levels of inflation.

Sales rose just 0.1% on the month, one-tenth of a percentage point below the Dow Jones estimate, according to a Commerce Department report Tuesday that is adjusted for seasonality but not inflation. However, the result was slightly better than the downwardly revised 0.2% decline In April.

On a year-over-year basis, sales rose 2.3%.

The sales number was worse when excluding autos, with a decline of 0.1% against the estimate for a 0.2% increase.

Moderating gas prices helped hurt receipts at gas stations, which reported a 2.2% monthly decline. That was offset somewhat by a 2.8% increase at sports goods, music and book stores.

Online outlets reported a 0.8% increase, while bars and restaurants saw a 0.4% decline. Furniture and home furnishing stores also reported a 1.1% drop.

Stock market futures were around flat following the report while Treasury yields declined.

The report comes with investors on edge about the direction of the economy and what that will mean for the future of monetary policy at the Federal Reserve. Consumer spending is responsible for about two-thirds of all economic activity, so any weakness could signal both a retrenchment in growth while also pushing the Fed to begin cutting interest rates.

Inflation numbers of late have been somewhat encouraging, but spending is showing signs of weakening as consumers have been under pressure from rising prices for more than two years.

A Commerce Department measure that the Fed uses as its main gauge for inflation showed an annual rate of 2.7% in April, or 2.8% when excluding food and energy. The Fed targets 2% inflation.

Market pricing is pointing to the equivalent of two interest rate reductions this year of a quarter percentage point each, though Fed officials

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