Citigroup on BoE Meeting - FJElite

The MPC minutes showed a more hawkish tone than the July MPR. Policymakers do not yet see clear evidence of second-round inflation effects, but they are increasingly concerned that this may not last. The main risk is that higher headline inflation, particularly from energy, begins to feed into core prices through indirect effects.

The outlook now depends heavily on the Strait of Hormuz. A resolution would likely weaken the case for further tightening, but if energy pressures persist, the MPC appears to be preparing markets for a 25bp hike in Q4, most likely in November, with December still possible. Tighter financial conditions are giving the Committee some room to wait, but the overall message is that the current hold may not last much longer.