United Kingdom: Moving on up

Research evidence excerpt

United Kingdom: Moving on up

Francis Diamond AC (44-20) 7134-1504 Global Markets Strategy J P M O R G A Nfrancis.diamond@jpmorgan.com

J.P. Morgan Securities plc 19 June 2026

Marcus Mayfield (44-20) 3493-8050

marcus.mayfield@jpmorgan.com

J.P. Morgan Securities plc

term”. Amongst the members who voted for unchanged rates, the minutes highlighted that

one member (Mann) noted that “upside inflation risks were more prominent across possible

future outcomes, but an immediate increase in Bank Rate was not required given their view

that policy tightening would transmit to the economy rapidly”. Our economist has pushed

back the call for a BoE 25bp rate hike to November as the BoE is indicating little urgency

for a near-term hike and appears to be waiting for clearer signs of second-round effects.

The front end of the SONIA curve has modestly rallied post the BoE, reversing the sell-off

seen in the morning following the US market repricing of increased rate hikes following the

hawkish Fed delivery on Wednesday. Around 16bp of BoE hikes are priced in by September,

35bp of cumulative hikes by December and a peak of 45bp of BoE hikes by next April (Fig-

ure 2WekeptacticalypaidSep26MPCOISwith16bpofhikespricedandacumulative46bpofhikesbyApril2027). Given market pricing, we continue to tactically pay Sep26 MPC OIS. Even though

we acknowledge the softer inflation print this week combined with the BoE’s June meeting

delivery removes any urgency for the BoE to hike, we expect that more visible evidence of

indirect effects in the upcoming surveys will result in the BoE hiking later this year. While

the BoE sounds patient now about waiting for clear evidence of second round effects,

we think the BoE will not want to risk being late in tightening policy if inflation pres-

sures are building.