LONDON (AFX) - There was little response to today's Inflation Report on the currency markets but yields on UK gilts, particularly at the short-end, slipped as fears about imminent rate hikes diminished slightly, dealers said. In its quarterly analysis into the state of the UK's inflation, the Bank of England said RPIX, the government's preferred measure of inflation in that it strips out mortgage costs, will remain near 2 pct for most of this year. "The inflation profile is very close to that in the November Report," the bank said. Fears had been raised following yesterday's inflation numbers that the profile had fundamentally changed on continued buoyant consumer spending. Michael Derks, a strategist at Commonwealth Bank of Australia, is so confident inflation remains firmly under control that he is pencilling in another interest rate cut in the summer. "There's very little to be concerned about," he said. In particular, he noted the average earnings numbers earlier, which increased at their lowest rate since spring 1996, despite unemployment falling for the first time in four months. Headline average earnings rose a seasonally adjusted 3.3 pct year-on-year in the three months to December compared with a revised 4.1 pct rise in the three months to November and expectations of a 4.0 pct increase. Yet again, the figure remains below the BoE's comfort zone of 4.5 pct. "The evidence is increasingly going on the side of inflation being well-behaved," said Derks. Steve Scott, analyst at Dresdner Kleinwort Wasserstein, also said average earnings were positive for the market, particularly at the short-end, which had been sold off aggressively yesterday. The March short sterling future is up around 9 basis points on the day, recovering much of the ground lost yesterday. pp/cml NNN