diff --git a/VERSION b/VERSION
index 53c9cab1..365525db 100644
--- a/VERSION
+++ b/VERSION
@@ -1 +1 @@
-0.60.2
\ No newline at end of file
+0.60.3
\ No newline at end of file
diff --git a/frontend/src/components/AnchoredPopover.tsx b/frontend/src/components/AnchoredPopover.tsx
index bdce815e..ddf2cee1 100644
--- a/frontend/src/components/AnchoredPopover.tsx
+++ b/frontend/src/components/AnchoredPopover.tsx
@@ -440,12 +440,12 @@ function PopoverSurfaceInner({
           positioned element is essential: the popIn keyframe animates `transform`, which would
           otherwise override Floating UI's `transform: translate(x,y)` and park the popover at (0,0)
           for the animation's duration — the "flash in the top-left corner" bug. */}
-      <div
-        className={className}
-        style={style}
-        // Pointer left the menu → drop the hover highlight so it returns to the keyboard position.
-        onMouseLeave={() => setHoverIndex(null)}
-      >
+      <div className={className} style={style}>
+        {/* Intentionally NO onMouseLeave hover-reset: when the pointer leaves, the last-hovered row
+            stays highlighted (feels natural, and a menu with a free-text input like ChannelTags — where
+            the field swallows arrow keys, so there is no list-nav — has nothing to reclaim it otherwise,
+            so it used to snap back to the first item). Keyboard nav / typeahead take the highlight back
+            by nulling hoverIndex in onNavigate/onMatch above. */}
         {children}
       </div>
     </div>
diff --git a/frontend/src/lib/releaseNotes.ts b/frontend/src/lib/releaseNotes.ts
index fe961d02..06264e40 100644
--- a/frontend/src/lib/releaseNotes.ts
+++ b/frontend/src/lib/releaseNotes.ts
@@ -14,6 +14,13 @@ export interface ReleaseEntry {
 }
 
 export const RELEASE_NOTES: ReleaseEntry[] = [
+  {
+    version: "0.60.3",
+    date: "2026-08-08",
+    fixes: [
+      "In a menu, the highlight now stays on the row you last hovered when you move the pointer off it, instead of snapping back to the first item.",
+    ],
+  },
   {
     version: "0.60.2",
     date: "2026-08-08",