Beijing has plenty of problems on its plate. Budding inflation, despite a lot of talk, isn't one of them.

Last week's failures of two auctions of government debt suggested that investors, noting bubbles in stocks and housing, were positioning for the central bank to abandon its – understatement of the year – “moderately loose” monetary policy. That is one explanation. The other is that yields were simply set too low, and that buyers (read banks, freed from lending quotas) saw better opportunities elsewhere. The latter reading looks closer to the mark. On Wednesday, investors were offered a yield to match existing notes; the auction went off without a hitch.

Expectations of price rises are hard to gauge; China has no inflation-linked bond market, and the quarterly People's Bank of China survey of 20,000 urban households is unscientific, to say the least. But it is likely that the PBoC will be under orders to hold off raising rates or arresting loan growth for at least the next six months. After all, China is still officially deflating. Seasonally-adjusted, month-on-month consumer prices are likely to rise for the fourth consecutive month in June. But on an annual basis CPI is still falling, at a minus 1.4 per cent rate in May.