China's Wu Xiaoling cool on asset prices

"We watch the consumer prices and analyse where the inflation pressure comes from,'' Wu said. "Consumer prices should be kept stable by a moderate money supply, for which purpose, the inter-bank liquidity should be controlled to some extent.''

China's average housing price in 70 major cities grew 6.4% from a year earlier in May, the fastest rate of growth in 18 months, the government said last month.

Given the pace of the economic expansion and growing signs of inflationary pressure, the central bank has adopted a policy of interest rate hikes and tighter reserve requirements for banks over the last 12 months. However, many observers have suggested that these policies have been largely inaffective.

The rapid rise of the Chinese stock market has been a particular area of concern for policymakers. The country's benchmark stock index has quadrupled since the start of last year as investors poured savings into shares. Central bank Governor Zhou Xiaochuan said last month that shares may be overvalued.