China will lower lending rates for loans made under the standing lending facility (SLF), a policy tool to inject cash into the banking system, in the latest step to support the slowing economy. The overnight rate would be cut to 2.75 percent and the seven-day rate to 3.25 percent, effective Friday, the People's Bank of China (PBOC) said in its official microblog on Thursday. The rates are now at 4.5 percent and 5.5 percent, respectively.
The fresh move to lower borrowing costs for businesses is in line with recent policy easing to support the slowing economy and as Chinese banks face a surge in troubled loans. "There is no doubt that the central bank's move is aimed at lowering the cost of bank liquidity," said Xue Hexiang, a strategist at Huatai Securities. Li Huiyong, an economist at Shenyin & Wanguo Securities, said the cut to the SLF signalled more policy easing ahead.