Higher order inference for lookup types does not work

[weswigham]

Inference for T[K] to U[Y] was supposedly introduced in #18391, however looking over the code, this case in inferTypes in checker.ts:

                else if (source.flags & TypeFlags.IndexedAccess && target.flags & TypeFlags.IndexedAccess) {
                    inferFromTypes((<IndexedAccessType>source).objectType, (<IndexedAccessType>target).objectType);
                    inferFromTypes((<IndexedAccessType>source).indexType, (<IndexedAccessType>target).indexType);
                }

is unreachable code.
This is because the first if statement in the if-else if chain is

if (target.flags & TypeFlags.TypeVariable) {

which is true when the target is TypeFlags.IndexedAccess, as TypeFlags.TypeVariable = TypeFlags.TypeParameter | TypeFlags.IndexedAccess.

TypeScript Version: 2.6.1-insiders.20171019 (current playground)

Code

declare function get<U, Y extends keyof U>(x: U, y: Y): U[Y];
declare function find<T, K extends keyof T>(o: T[K]): [T, K];

function impl<A, B extends keyof A>(a: A, b: B) {
    const item = get(a, b);
    return find(item);
}

Expected behavior:
impl has return type [A, B]

Actual behavior:
impl has return type [{}, never]