The SLF, created by the central bank in 2013 to provide liquidity to national commercial and policy banks, was previously limited to 10 provinces and cities.

Compounded by holiday demand and IPOs, interest rates in the money market will unavoidably edge higher in the short term. But in the longer term, the PBOC's monetary policy will continue to be guided by the principle of stabilizing money supply, Zhou said.

Chang Jian, chief China economist at Barclays Plc, said that slower GDP growth and the decline in inflation should prompt the PBOC to ease monetary policy further.

Chang characterized the recent easing as a "reluctant" move by policymakers who must weigh the need for further accommodation against the risk of fueling asset bubbles and delaying needed structural adjustments.

Chang said that additional easing could not be ruled out if inflation continued to decline or GDP growth kept weakening.