Beijing, November 19

China will lower lending rates for loans made under the standing lending facility (SLF) — a policy tool to inject cash into the banking system, the central bank said today, in the latest step to support the slowing economy.

The overnight rate would be cut to 2.75 per cent and the seven-day rate to 3.25 per cent, effective Friday, the People’s Bank of China (PBoC) said.

The central bank did not give the current rates. The fresh move to lower borrowing costs for businesses was in line with its recent policy easing to support the slowing economy.

It would help develop a market-based ‘interest rate formation mechanism’ by ‘facilitating the role of SLF interest rates in forming the ceiling of an interest rate corridor’, PBoC said.

The step took into account the current liquidity condition and the need to adjust monetary policy, the central bank said without elaborating.

China’s central bank cut interest rates on October 23 for the sixth time in less than a year, and it again lowered the amount of cash that banks must hold as reserves in a bid to jump start growth in its stuttering economy.

The PBoC then lifted caps on bank deposit rates to liberalise interest rates, but it said it would continue to publish benchmark market rates while trying to develop a set of market-based interest rates.