The People's Bank of China will focus on supporting the expansion of domestic demand while paying notice to changes in inflation, the central bank said in its fourth-quarter monetary policy report on Friday.

Vowing that prudent monetary policies will be targeted and effective, the report said the PBOC will ensure stable, sustainable support for the real economy, maintain effective credit growth and reduce the financing cost of corporates and consumers.

Structural monetary tools will focus on providing reasonable, moderate support for key areas such as inclusive finance, technological innovation and green development, to promote a vibrant consumption recovery and help lift the potential of economic growth, the report said.

While the country's inflation is expected to stay mild, the central bank will still keep a close eye on changes in the inflation situation, support the supply of energy and food, and keep price levels generally stable, according to the report.

Efforts will also be made to promote mergers and acquisitions in the real estate industry and improve housing financial services for newcomers to cities and young people, the PBOC said, adding that it will continue to avoid taking the real estate sector as a means of short-term stimulus.

The PBOC and the China Banking and Insurance Regulatory Commission released a draft guideline on Friday to strengthen financial support for rental housing, proposing to facilitate lending to rental housing development and enrich the financing and investment channels of the rental housing market.