BEIJING, May 10 (Reuters) -

China's central bank said on Friday it will ensure reasonably ample liquidity and credit expansion to consolidate the country's economic recovery, which still faces many challenges.

The People's Bank of China (PBOC) will guide the growth of credit and keep liquidity ample, the bank said in its quarterly monetary policy implementation report.

"We will maintain the stability of monetary policy, enhance the consistency of macroeconomic policy orientation, strengthen counter-cyclical and cross-cyclical adjustments, increase support for the real economy, and effectively consolidate and enhance the positive trend of economic recovery," it said.

"The global economic recovery momentum is divided, and uncertainties such as monetary policy adjustments and geopolitical conflicts in developed economies still exist. The sustained recovery of the domestic economy still faces many challenges."

The Communist Party's top

decision-making body

last month pledged to step up support for the economy with prudent monetary policy and proactive fiscal policies, including through interest rates and bank reserve requirement ratios.

China will handle the relationship between its credit and bond markets carefully and guide the growth and balanced allocation of credit, the central bank said.

The central bank will keep the yuan basically stable to prevent the risk of the exchange rate overshooting, it said.

China's yuan

weakened slightly

on Friday as reports of fresh trade restrictions from Washington weighed on the currency, although trading ranges were modest ahead of key U.S. inflation data due next week.

China's low consumer prices are due to a lack of demand, the PBOC said, adding it expected a mild increase in consumer prices by the end of the year and a narrower contraction in producer prices. (Reporting by Ella Cao, Ethan Wang and Kevin Yao; editing by Mark Heinrich and Hugh Lawson)