BEIJING - China's latest cut in interest rates has enabled the nation's banks to lend at record-low rates, underlining its efforts to support the real economy amid a persistent slowdown.

The People's Bank of China, the country's central bank, on Friday cut the benchmark one-year lending rate by 31 basis points to 6 percent, and the one-year deposit by 25 basis points to 3 percent.

It also allowed banks to offer an upper 30-percent discount to borrowers, further expanding from 20 percent from the first cut on June 7, while the cap on the deposit rate increase was unchanged at 10 percent.

The cut took the market by surprise, as such frequency has rarely been seen, observers said.

The six-basis points difference in cuts between deposit and lending rates also showed the government's attempt to let the market play a role. It followed a similar one in 2008, when the central bank slashed lending rate, but left the deposit rate unchanged.

Combined with the previous cut, the first time in over three years, the benchmark one-year lending rate was down 50 basis points in total.

"With more discount room, banks will gradually offer cheaper loans, which will ease the financing pressure and cost for enterprises and help boost growth," said Qiu Gaoqing, a financial analyst at the Shanghai-based Bank of Communications.

The 6-percent benchmark one-year lending rate is only slightly higher than those record-low rates implemented during the crisis period from 2008 to 2010, according to Lu Zhengwei, chief economist at Industrial Bank.

But if taking into account the 70-percent discount, the rate on a one-year loan could be pushed down to a fresh low of 4.2 percent, Lu said.

It suggests that gross domestic product (GDP) growth may have eased considerably in the second quarter, he said, forecasting 7.6-percent GDP growth for the period, close to the government full-year target of 7.5 percent.

The cut came only days ahead of the release for a string of economic data, including GDP and industrial production, which analysts perceive may indicate a worse-than-expected slowdown.

China spent the last two years tightening controls to cool the runaway inflation before reversing course lately, as its first-quarter GDP slowed to an almost three-year low of 8.1 percent.

Two cuts were made this year to lower banks' reserve ratio, in a bid to pump liquidity into the economy. Yuan-denominated loans are expected to exceed 1 trillion ($159 billion) in June.

Qiu said the surprise cut shows a strong intent by the government to maintain growth, as easing inflation in June provided room for rate cuts. China's inflation growth is expected to fall below 2.5 percent in June from 3 percent in May, the lowest since the first quarter of 2010.

Thursday's announcement called on banks to continue differentiated mortgage rates to curb speculative home purchases, indicating the government's awareness of a possible rebound in the housing market.

Under a looser credit environment, money will directly or indirectly flow to the property market anyway, said Su Ri, an analyst with Beijing-based Century 21 China Real Estate.

The real estate market has picked up recent months, but will unlikely boom again anytime soon given the government's stance, Su said.

Real estate investment accounted for over 20 percent in China's total fixed asset investment, one of the economy's key growth drivers. Its annual growth slowed to 18.5 percent in May, down from 38.2 percent in May 2010.