Some small and medium Chinese commercial banks have adjusted their deposit rates upward in response to the latest move by the central bank to cut benchmark interest rates, the Shanghai Morning Post reported Monday.

The People's Bank of China (PBOC) announced on Saturday evening that it will slash benchmark deposit and loan interest rates by 25 basis points from March 1, bringing the one-year deposit rate to 2.5 percent and the lending rate to 5.35 percent.

In another step towards liberalizing the interest rate mechanism, the PBOC also decided to adjust the upper limit of the floating band of deposit rates to 1.3 times the benchmark, when previously it had been set at 1.2 times.

China's economy is expected to slow to an annual 7 percent in the first quarter of 2015, the State Information Center projected in a research report, which underscores the rationale of the central bank's move to cut rates for the second time in three months as it hopes to ward off deflation.

The think-tank says the country's economic growth still faces relatively heavy downward pressure amid structural adjustments.

Immediately after the central bank's announcement, some joint-stock banks raised their deposit rates by as much as 30 percent based on the benchmark rates, Shanghai Morning Post reports. China Zheshang bank even floated the rate for five-year deposits as high as 5.4 percent, the story says.

Industry insiders attribute the banks' move to China's accelerating process towards market-determined interest rates.

Floating deposit interest rates to the upper limit has become an important means for small and medium banks to attract deposits, they say.

Although the cut in lending rates will ease the pressure on home mortgage slaves, those who have already started to pay back their loans will have to wait until January 2016 to enjoy the lower rates, the newspaper says.