/etc/profile sets INPUTRC, which causes readline to ignore
~/.inputrc. Not very popular with my users :-)
One fix is to use the undocumented(!) keyword $include at
the end of /etc/inputrc:
Works for me.
The suggested fix only works for bash 2. But I consider it a bug
that /bin/bash still is 1.14, anyway. :-)
(The fix has no ill effects for bash 1.14 that I can see.)
This is fixed in the current setup package; /etc/inputrc
is only used if $HOME/.inputrc doesn't exist.