China will maintain a prudent monetary policy to highlight the quality and efficiency of economic expansion, according to a report published by the People's Bank of China (PBOC), the country's central bank, on Thursday.

The report, showing the performance of China's monetary policy in the first quarter of 2013, urged a maintenance of prices at stable levels through enhancing the foresight, pertinency and flexibility of monetary policy, as well as reining in inflation.

Currency credit and social financing should be guided for smooth and moderate growth with combined monetary policy tools, the PBOC said.

It also demanded mild liquidity in the banking system so as to preserve a stable market interest rate.

Meanwhile, the report mentioned the challenges baffling the world's second-largest economy including infirm foundations for stable economic growth and insufficient growth from within.

The central bank specially vowed caution against future inflation risks. China's consumer price index, a main gauge of inflation, grew 2.4 percent year on year in April, up from 2.1 percent in March.

(Xinhua News Agency May 9, 2013)