View of the headquarters and head office of the Peoples Bank of China (pboc), Chinas central bank, in Beijing, China, 1 October 2014. [Photo: Imagine China]

The governor of China's central bank Zhou Xiaochuan has warned that the country needs to be vigilant in watching for signs of deflation.

Zhou says policymakers are closely watching slowing global economic growth and declining commodity prices.

His comments are thought to address concerns that China is in danger of slipping into deflation and underline increasing nervousness among policymakers about long-term economic growth prospects.

Zhou adds that the speed with which inflation was slowing was a "little too quick", though this was part of China's ongoing market readjustment and reforms.

The People's Bank of China has cut interest rates twice since November and taken other steps to shore up economic growth.

Some analysts believe that China's central bank will be forced to take more aggressive measures in coming months if price levels for key commodities continue to fall.