Citi on BoE - FJElite

The Bank of England's MPC voted to hold at 3.75% as expected, with Megan Greene joining Huw Pill as a second dissenter for a 25bps hike. While the communications was still on the hawkish end, they are now starting to lean against given the underlying weakness in the real economy. The MPC still care about the potential impact of inflationary persistence and second round effects, but at this juncture, they are placing their emphasis on demand-management. We continue to expect a hold this year, with the next cut in 2027Q2. Rates strategy view: The June MPC reinforces expectations for a long hold, but residual hike premium in SONIA is likely to reduce only slowly.