TS 3.5 regression casting `object` to `{ [key: string]: unknown };`

[mjbvz]

TypeScript Version: 3.5.0-dev.20190507

Search Terms:

• index signature
• unknown

Code

export interface I { 
    foo(): { [key: string]: unknown };
}

export class B implements I {
    foo(): object {
        return {};
    }
}

Expected behavior:
This code compiles without errors in TS 3.4.5

Actual behavior:
In 3.5@next, there is the error:

Property 'foo' in type 'B' is not assignable to the same property in base type 'I'.
  Type '() => object' is not assignable to type '() => { [key: string]: unknown; }'.
    Type 'object' is not assignable to type '{ [key: string]: unknown; }'.
      Index signature is missing in type '{}'.

This may be by design but I'm not sure which issue tracks the change.

We hit this issue in the vscode codebase

Playground Link:

Related Issues:

[ahejlsberg]

This is an intended effect of #30637. See rationale here.