央行:稳健的货币政策不会改变

China's central bank, the People's Bank of China, announced on Saturday to cut its key rates from Sunday, to ease deflationary pressure.

This is the second round of key rates cuts in three months and the first in the new year, underscoring continuing downward pressure on the world's second-largest economy. However, analysts say the rate cuts does not mean China is changing its monetary policy.

China's central bank on Saturday decided to cut benchmark interest rates by 25 basis points amid deflation worries.

According to the PBOC, from March 1, the one-year loan interest rate will be lowered to 5.35 percent, while the one-year saving rate will drop to 2.5 percent.

The central bank also decided to allow more flexibility for the interest rates. The ceiling for the floating range for the saving rate could be 1.3 times the bench mark rate, instead of the previous 1.2 times.

Analysts say the focus of the latest rates adjustment is to keep real interest rate levels accommodative to the changing fundamental trends in growth, inflation and employment.

China's economy grew 7.4 percent in 2014, the weakest annual expansion in 24 years, and a string of domestic economic activity was likely to remain sluggish while external demand looked uncertain.

To try to stop the economic slowdown, China cut interest rates in November and lowered the reserve requirement ratio for banks in early February.

But the protracted slowdown came amid subdued price levels in the country, which gave leeway to the government to further ease monetary policies if needed.

The rate cuts will bring down the cost of private financing, ease business pressure, in turn helping to stabilize growth.
 
Analysts say the move will also help reduce debt risks and ease deflationary pressure, but whether it will significantly address the slowdown remains to be seen.

China is expected to unveil its growth target for 2015 in a government work report to be delivered by Premier Li Keqiang on March 5. Analysts expect the goal to be set at around 7 percent.