The March CPI figures released today look like presenting a dilemma for China's monetary policies. Consumer prices are continuing to rise, while the downward pressure on the overall economy remains serious. What does that mean for policy in the short term?

China's monetary policy for last year and this year has long been described by the People's Bank of China as "stable and somewhat accommodating". The central bank cut the interest rates and the requirement reserve ratio each by 5 times last year. All that helped China achieve an annual GDP growth of 6.9 percent.

One analyst says, however, that there are still some challenges remaining despite everything the central bank has done to help boost growth and maintain liquidity.

"One of the major problems is in the transmission mechanism of our monetary policies. Last year, the fastest response to the interest rates cuts came in the stock market: margin trading. In the first quarter this year, we saw it happen in the property market with downpayment loans. That implies that no matter whether it's the stock market, the banking system or the internet finance system, they all have difficulties channeling money into prospective companies that need money," said Proffesor Qian Jun, Shanghai Jiaotong University.

In the first quarter of 2016, economic data reflected different, in fact, opposing intervention needs. The downward pressure remains on China's economy, which shows that the country still needs an easy monetary policy. The continuous rise of the consumer prices and the over-heated property market say otherwise, however. In February, the central bank already cut the banks' reserve requirement ratio for the first time in 2016. What more can the central bank do to balance the competing demands?

"From the data we see now, I think the monetary policy for 2016 needs to be stable and moderate, instead of stable and easing. So I don't think there will be a very high chance of interest rates cuts. But there is room for reserve ratio cuts. However, the cuts will not be much because they will be intended only to help maintain liquidity," said Lian Ping, chief economist of Bank of Communications.

Both experts suggest the central bank make only cautious moves regarding monetary policy. Lian points out that supply-side reforms in the manufacturing sector will also have a big influence on China's economy this year. A Reuters poll on analysts' expectations for China's GDP in the first quarter stands at 6.7 percent, a hair down from the 6.8 percent for the fourth quarter of last year. The real figure will be released this Friday.