"If data for May and June show that investment and credit continue to post strong growth, the authorities could consider further adjustments to interest rates and to increase the reserve ratio requirement for banks," the National Development and Reform Commission (NDRC) said.

"For now we should calmly observe the situation and closely monitor the development in the economy. It is inappropriate to issue further tightening policies in macro-control right now," the commission said in the report carried by the official China Securities Journal.

The central bank made a similar statement last month after it began tightening credit conditions in April.

Although the central bank raised its key one-yer interest rate by 27 basis points to 5.85 percent on April 28, it is still struggling to mop up excess liquidity contributing to excessive credit and investment, the report said.

For one, urban fixed asset investment rose 29.6 percent in the first four months of 2006, signalling that China's booming economy has yet to slow and runs the serious risk of getting ahead of itself.