China's interest rates will likely be liberalized within two years, central bank governor Zhou Xiaochuan said Tuesday, signaling that the bank would gradually phase out the ceiling on deposit rates.

Zhou's comments are in line with the central bank's pledge to embrace a fully market-based interest rate system as part of reforming its financial system.

"Deposit rate liberalization is on our agenda," Zhou told a media conference. "Personally, I think it's very likely to be realized within one to two years."

With regard to the broadening of the yuan, the policymaker noted that the PBOC does not intent to set the pace or timing in advance, and is focused on medium-term trends. The exchange rate is determined mainly by market forces, he said.

Last week, the government reaffirmed its 7.5-percent growth target for this year, and vowed to build on domestic spending.

China's steady growth has exceeded target in 2013 even as Beijing pledged to press ahead with reforms. The 2013 GDP growth stood at 7.7 percent.

RTTNews