Today’s Inflation Report release and press conference followed the usual ritual, with the Bank listing all the reasons it does not know where growth and inflation are heading but signalling that it remains biased towards more easing anyway.

The policy signal in each Inflation Report is contained in a single statistic – the mean forecast for inflation in two years’ time assuming unchanged policy. This was 1.29% in November and seems to be 1.8% in the latest Report, based on eyeballing chart 5.13. (The Bank’s policy of delaying publication of its forecast numbers until a week after the Report is designed, presumably, to embarrass economists with inferior visual skills.) The message is that the Bank thinks that further easing will be required to hit the 2% target but is less dovish than a quarter ago – hardly a surprise.

The most interesting analysis in the Report is a box on pages 34 and 35 presenting evidence that consumer-facing companies’ profit margins remain far below their pre-recession level. The Bank’s forecast that the 12-month CPI increase will fall below 2% rests on a reduction in domestically-generated inflation as a pick-up in productivity growth puts downward pressure on unit labour costs. Firms, however, are more likely to use any slowdown in unit costs to rebuild margins, resulting in “core” inflation – stable above 2% in recent months – remaining elevated.

In a discussion on page 11 of the reasons for the weakness of broad money in the fourth quarter, the Bank seems to acknowledge that it has overpaid for gilts because of market players front-running its purchases, stating that “some financial institutions in the non-bank private sector may have borrowed money from banks to buy gilts in Q3 in anticipation of further asset purchases being announced by the MPC. That would have boosted money growth in Q3 and reduced it in Q4 when the gilts were sold and the loans were repaid.” Cue more populist headlines about QE fuelling City bonuses?