Mainland banks made fresh loans of 739.6 billion yuan (HK$884.54 billion) in April, up from 679.4 billion yuan in March, but 20.8 billion yuan lower than in the same month a year earlier, the People's Bank of China said yesterday. The loans lifted total outstanding lending denominated in yuan to 50.21 trillion yuan at the end of April, up 17.5 per cent year-on-year. The steady credit growth, reflecting robust demand from the economy, suggested that policymakers would need to keep reining in loans in the uphill battle against inflation in the next few months, analysts said. The growth of M2, a money supply measure that includes cash and all deposits, slowed to 15.3 per cent last month, from the 16.6 per cent in March and 21.5 per cent a year ago, the central bank said. 'The money supply growth was below expectations. However, I don't think there was any reason for the central bank to celebrate,' said Yao Wei, a China economist at French investment banking group, Societe Generale. In trying to tighten liquidity, China has capped loan growth, raised interest rates four times since last October, and increased required reserve ratios for the country's biggest banks to a high of 20.5 per cent. China's Consumer Price Index rose by 5.3 per cent year-on-year in April, just below a 32-month high of 5.4 per cent in March. Monetary policies are likely to remain focused on combating inflation as economists widely expect it to continue climbing in summer. Yao said the slowdown in broad money growth was mostly due to the sharp 467.8 billion yuan decline in household deposits. 'The deeply negative real deposit rates have encouraged previously conservative Chinese households to look at all kinds of investment alternatives, including trust, leasing, and even commodity trading,' she said. 'Current available money measures are getting too narrow to gauge real liquidity conditions in China.' China's one-year benchmark deposit rate is 3.25 per cent currently, short of the 5.1 per cent CPI increase in the first four months of this year. Grace Ng, an economist with JPMorgan Chase Bank, expects at least one more rise in the ratio of assets that banks are required to hold in reserve.