Statistics bureau's optimism suggests action on interest rates is not imminent Beijing has expressed confidence that it can prevent an inflation crisis, signalling it might delay actions on interest rates. The latest signal came from the National Bureau of Statistics, which said increases in mainland prices remained under control. 'About the current price increases, the bureau believes that the level of increase is still entirely within [our] range of control,' Xinhua reported last night. '[China] can certainly avoid the problem of serious inflation.' Quoting information provided by the bureau, Xinhua said the central government still recognised the country faced severe bottlenecks in sectors such as coal, electricity, oil and transport, and the problem of over-investment in individual sectors remained acute. '[We] must remain clear-minded and understand that some contradictions in our economy are still unresolved,' it said. 'Controlling sharp rises of market prices is still an important task [for the government] in exercising macro-control of the economy.' The bureau's remarks came after Mu Huaipeng, head of the People's Bank of China (PBOC) research bureau, was quoted by the China Securities Journal as saying the central bank needed to analyse inflation trends in June, July and August before making a final decision on rates. 'It's a complicated issue and we can't just raise interest rates without careful consideration. We have to look carefully at price movements before we make a decision,' Mr Mu was quoted as saying. The market was flooded with speculation that the central bank would raise interest rates soon after its governor, Zhou Xiaochuan , hinted that a rate increase would be in the pipeline if inflation exceeded 5 per cent this month. Statistics released last week showed the government's policies to cool the economy were having an effect, but the seasonally adjusted consumer price index (CPI) still jumped from 3.8 per cent to 4.4 per cent from April to May. The rise in the CPI prompted economists to express fears that interest rates would be increased even while the economy was slowing, hurting the private sector, which already has a difficult time getting bank loans. 'The PBOC says no more tightening steps until the CPI gets to 5 per cent - this was mentioned in an offhand way in a speech,' said a report released yesterday by independent analyst Donald Straszheim, a former chief economist for Merrill Lynch in New York. 'Five per cent has become the real target - and the central bank has to act or lose credibility.' However, in comments reported yesterday, Mr Zhou seemed to back away from his earlier remarks, telling state media that he was happy with how May statistics showed the government's policies were working.