Interest rate hikes 'cannot be ruled out' (2)

In 2004, the PBOC removed its lower limit on bank deposit rates and permitted lending rates among lenders to be 10 percent lower than the benchmark rates.

In June 2012, it allowed bank deposit rates to be 10 percent higher than the benchmark rates, while cutting the lower limit of lending rates to 80 percent of the benchmark. In July, it further reduced the limit on lending rates to 70 percent.

Analysts have suggested the limits have been blamed for financial difficulty among enterprises, and have generated a rapid growth in shadow banking activities in recent years.

Shadow banking, as the name suggests, mainly refers to credit access outside the regular financial system.

An investigation into the shadow banking sector by the central bank and banking regulator concluded the problem was not as severe as some had estimated, Qian said.