China's consumer inflation steady, producer deflation narrows

"We expect the deflationary pressure in consumer prices to persist due to weak overall demand, despite the stabilization in global commodity prices," said Bob Liu, an analyst at the China International Capital Corp.

"We expect further loosening measures in the near future, which aim at boosting domestic demand and combating deflationary risk," Liu added.

To bolster the lukewarm economy, which expanded 7.4 percent in 2014, marking a 24-year low, the central bank has cut benchmark interest rates twice and banks' reserve requirement ratios once since November.

The wave of easing measures has prompted speculation that China's monetary policy has turned from "prudent" to "loose."

However, the central bank said last Friday that it will continue to implement a prudent monetary policy, balancing the need for economic controls against the need for liberalization.

After the quarterly meeting of China's monetary policy committee, the central bank said the complexity of China's current economic and financial operations should not be underestimated.

While stressing the need to keep policy prudent, the central bank said it will try to strike a balance between being too tight and too loose and resort to multiple monetary policy tools.

As the economy has yet to show convincing signs of improvement amid deflationary pressure -- as indicated by the weak manufacturing index -- expectations are high for further monetary easing measures.

At the 2015 Boao Forum for Asia (BFA) on March 29, central bank governor Zhou Xiaochuan said, "We must remain prudent and alert in assessing whether the inflation trend will continue and whether deflation will occur."