China cuts lending rates amid weak demand and deflation

China's central bank cut interest rates for the second time in less than four months, a new sign that the country's leadership is acting more aggressively in an attempt to curb economic growth. The Chinese government is expected to present its 2015 growth forecast of about 7 percent, up from 7.5 percent last year.

The deposit rate has been cut by 25 basis points for one year to 2.5 percent, and the loan rate is reduced 25 points to 5.35 percent from March 1, the People's Bank of China said on its website. Deflationary risks and a slowdown in the real estate market are the two main reasons for the rate cut this time around.

At the same time, the control of growth in the steel industry in China is proceeding successfully. Growth has declined for the tenth straight month, despite the recent recovery in activity. The purchasing managers' index, which measures activity in the sector, was 45.1 in February. Any reading above 50 indicates growth, while below 50 indicates contraction.

The move reflects deepening concerns over economic restructuring, tightening controls on government debt and rising capital outflows. The People's Bank of China is stepping up its mitigation measures along with a dozen global partners this year amid falling commodity prices, opening up opportunities to support producers.

The actions of the People's Bank of China are aimed at maintaining the stability of the country's financial market. In January 2015, consumer prices in China rose at the slowest pace in more than five years, and deflation deepened to its lowest level since 2009. The rate cut represents a sensible change in monetary policy, according to the Bank of China.