Here’s a productivity-enhancing suggestion for students of the Bank of England’s Inflation Report. To deduce the policy message, ignore the copious verbiage and focus on a single statistic – the mean forecast for inflation in two years’ time based on unchanged policy. A number above 2.0% signals that policy tightening is required. If, in addition, the number is higher than last time, tightening is judged to be more urgent.

Both conditions were met in the latest Report. The mean two-year-ahead forecast is 2.35%, up from 2.19% in February. The MPC, therefore, has become slightly more hawkish, although Mark Carney was at pains not to disturb current market expectations of a first rate rise next spring in his press conference comments. The rise in the two-year-ahead forecast follows cuts in February and November – see first chart.

This hawkish shift, despite a downward revision to GDP growth, reflects greater pessimism about near-term supply prospects. Productivity is now projected to rise by only 0.25% this year, down from 0.75% in February.

The expectation here is that a further hawkish adjustment will occur by August as pay growth exceeds the MPC’s downwardly-revised forecast. Today’s labour market report, unseen by the Bank, showed annual growth of average weekly earnings of 1.9% in the three months to March, and 3.3% in March alone, which compares with a projection of 2.5% in the fourth quarter of 2015 (cut, strangely, from 3.5% in February). The job openings or vacancies rate continues to suggest a pick-up in pay pressures – second chart.

(A monetarist gripe: The May Report contains nine pages of analysis of potential supply but only three sentences about monetary developments. The Bank’s long tradition of ignoring money continues, despite its key role in the 2005-09 financial boom / bust.)

The recent surge in global government bond yields is consistent with the forecast here that growth and inflation will rebound in the second half of 2015, resulting in a change in direction of monetary policies.

A post in February suggested that global growth would pull back into mid-2015 before strengthening significantly in the second half. A pick-up was expected because real narrow money expansion had risen sharply in late 2014 / early 2015 and typically leads activity by six to 12 months.

An April update concluded that this scenario remained on track and, together with a likely inflation rebound, posed a risk to government bond markets. A post in March had noted that Eurozone real yields were at a similar negative level to those in the US in 2012 ahead of a major market sell-off.

Full monetary data are now available for March. Six-month growth of global real narrow money fell back from February’s 38-month high but remains well above its 2014 average – see first chart. The monetary signal, therefore, remains green.

The forecast of a stronger second half is also now receiving support from the global longer leading indicator calculated here. The indicator drifted lower into February but recovered in March and appears to have risen sharply in April, based on preliminary data – first chart.

Another market development consistent with the forecast growth rebound is recent outperformance of stocks in “cyclical” industries relative to “non-cyclicals”. The relative performance of cyclicals correlates with G7 manufacturing purchasing managers’ new orders, which recovered slightly in April – second chart.

Will second-half economic strength carry over into 2016? As noted, real narrow money growth slipped in March and may fall further as inflation rebounds, unless nominal trends accelerate. The suggestion is that the coming economic pick-up will prove to be another false dawn. Markets, however, have probably yet to adjust fully to the near-term positive momentum change. Bond yields may have further to rise.