People's Bank of China released its Q1 09 report on May 6.  In the report, it says China's M2 money supply at the end of Q1 was 53.1 trillion yuan, up 25.5% from Q1 08.  Total loan balance at the end of Q1 was 35 trillion yuan, an increase of 29.8% over the same period of last year.  The weighted average interest rate for non-financial institutions was 4.76% at the end of Q1, 0.8% lower than at the beginning of Q1.

Even with the huge increase of money supply and recent signs that the economy might be turning around, the report dispelled the concern that huge supply of loans in the first quarter could trigger a rise in property and other assets' prices and thus lead to inflation.  Instead, the central bank said it will continue following a moderately loose monetary policy, ensure ample liquidity in the banking system and reasonably increase loans to fund the economy.

The report recognized recent positive changes in the economy and better than expected first quarter GDP, but it said that the impact of the world financial crisis on China is still worsening, China's economy is still under a lot of pressure, and the country still faces severe problems in over capacity, lower return, higher unemployment rate, and so on.