China's central bank on Monday began implementing a new reserve requirement ratio (RRR) for banks, allowing the country's lenders to keep fewer deposits in reserve to shore up the slowing economy.

Easing inflation encouraged China's policy-makers to shift the policy focus from price control to stabilizing economic growth due to slack external demand amid the staggering recovery in Europe and the United States, analysts said.

Economists widely expected the year-on-year growth of the consumer price index (CPI), a main gauge of inflation, to further ease below 5 percent in November, as weakening food prices will further drag down the CPI rate.

Different government data from the Ministry of Commerce, the Ministry of Agriculture and the National Bureau of Statistics (NBS) showed that prices of farm produce -- particularly the prices of meat and eggs that had risen rapidly in previous months -- have continued to fall moderately since the beginning of November.

Tang Jianwei, a senior macroeconomic analyst with the Bank of Communications, estimated that food prices will drop by between 0.7 percentage points and 1.5 percentage points.

Food prices account for about one-third of the calculation of the CPI.

The carryover factor, which measures the impact of last year's prices on the year-on-year changes in prices of this year, will pull down the yearly CPI growth in November by 1.1 percentage points, as compared with October, Tang said

"We projected the CPI growth to ease to around 4.3 percent in November," he said.

Lu Zhengwei, chief economist of the Industrial Bank Co., Ltd., anticipated the CPI growth in November to be between 4.2 percent and 4.4 percent.

The most optimistic inflation projection was from the Guosen Securities, a Shenzhen-headquartered financial services firm that said the year-on-year CPI growth in November would slow to between 3.8 percent and 4.0 percent, and marked the first reading to fall below the government's full-year inflation control target of 4 percent this year.

The NBS will release the November inflation data on Friday.

Weakening inflation, however, may underscore the pressure for China's policy-makers to spur a decelerating economy in the fourth quarter.

Vice Minister of Finance Zhu Guangyao said Thursday at a forum in Beijing that the current environment was "grim," calling for making country's policies more targeted and more flexible in response to a possibly stalled global economy.

To some extent, Zhu said, the severity of the current crisis is worse than that of the global financial meltdown in the wake of the bankruptcy of Lehman Brothers on Sept. 15, 2008.

"Hence, promoting economic growth should be made a top priority for now," Zhu said.

Monday's lowered required reserve rules slashed the RRR by half a percentage points to 21 percent for large commercial banks and 17.5 percent for mid- and small-sized banks.

An estimated 396 billion yuan (62.56 billion U.S. dollars) in capital will be released into the banking sector and allow banks to make loans.

Volatile overseas markets and mounting domestic pressure may prompt the the People's Bank of China (PBOC), the country's central bank, to lower banks' required reserves for another time in December at the earliest in order to sustain the slowing economy, according to analysts.

A month-on-month decline in the nation's falling yuan funds outstanding for foreign exchanges in October indicated a short-term capital outflow, which would lead to possible systemic risks in the world's second largest economy if the trend continues.

The amount of yuan funds outstanding for foreign exchanges dropped by 24.9 billion yuan from September, marking the first monthly decline in nearly four years.

Zhou Jingtong, an economist with the Bank of China, said he could not rule out the possibility for the central bank to lower RRR again to relieve the liquidity strain towards the end of the year.

Nonetheless, some economists cautioned that a thorough monetary policy shift, such as a reduction in interest rate, is not suitable for China for the year 2012, given lingering inflationary pressure.

"The inflation situation is far from optimistic for next year," said Wang Tongsan, head of the Institute of Quantitative and Technical Economics with the Chinese Academy of Social Sciences.

"What drives China's inflation now is rising costs rather than demands," Wang said, adding that price increases next year will be 4 percent or higher on average against the 2011 level.