The People’s Bank of China gave the world a very small Christmas present this year. The December 25 announcement of a 25 basis point increase in the lending rate to 5.81 per cent should help defuse global monetary tensions.

The central bank’s motivation was neither seasonal nor global; it is worried about domestic inflation. The annual rate rose to 5.1 per cent in November from 4.4 per cent in October, and food is no longer the only area of concern.

Still, the rest of the world should be grateful, even if a rising renminbi would be still more welcome. China is the destination of many of the dollars generated by stimulative US monetary policy, so Beijing’s efforts to keep those dollars from pushing up Chinese prices reduce the chances of a global outbreak of unwanted inflation.