Zhou Xiaochuan (center), head of People's Bank of China, and Yi Gang (second from left), head of State Administration of Foreign Exchange, take questions from journalists at home and abroad during a press conference on March 12, 2015. [Jiang Xueqing / chinadaily.com.cn]

Background information

The central bank, following an earlier cut in November last year, announced a 25 basis point cut in benchmark interest rates from March 1, lowering the one-year lending and savings rate to 5.35 and 2.5 percent respectively.

The cut coincide with the weak economic data which showed the country's economy fell to its lowest level of growth in the first two months of the year since the financial crisis.

The National Bureau of Statistics reported on Wednesday that industrial output growth year-on-year dropped to 6.8 percent in January and February, from 7.9 percent in December, with retail sales growth slowing to 10.7 percent from 11.9 percent in December.

Fix-asset investment growth also fell to 13.9 percent in the first two months, led by the slowdown in manufacturing and infrastructure sectors.

"To offset the headwinds to economic growth, we now expect monetary policy to be loosened even further," said Zhao Yang, China chief economist of Nomura, in a note on Thursday. The financial institution projects three more rate cuts this year, each by 25bp, and three 50 bp cuts to reserve requirement ratio.

Zhu Zhe, Chen Jia, Zhao Tingting, Dai Tian, Cai Muyuan and Zhang Jie contributed to this story.