The interest rate China\'s banks charge to lend money to each other fell sharply Friday, providing respite from a liquidity squeeze, but analysts warned the cash crisis is raising worries over the already slowing economy. The seven-day repurchase rate -- a benchmark for interbank borrowing costs -- fell to 8.33 percent from Thursday\'s close of 11.62 percent, amid rumours the central bank had pressured lenders to release funds. Rates have surged to record highs in the past two weeks as the People\'s Bank of China had refrained from injecting more liquidity -- owing to fears about a growth of bad debt -- which has in turn weighed on the economy. Chinese media reports said Friday that the central bank had injected 40 billion yuan ($6.3 billion) into several banks to relieve the funding crisis. The central bank has not made any public statements about its intentions since the credit crunch began. ANZ Banking Group said on Friday: \"As liquidity continues to tighten, Chinese commercial banks have slowed credit extension significantly. This will pose a significant downside risk to the economy.\" China\'s economy, a crucial driver of global growth, expanded 7.8 percent in 2012 -- its slowest pace in 13 years -- and recorded a surprisingly weak 7.7 percent expansion in the first quarter this year, well below forecasts. Recent weakness in the Asian economic giant had prompted some analysts to suggest the central bank would ease monetary policy but officials refused to budge. The soaring cost of borrowing has led to a credit crunch, which has sent stocks tumbling and means banks are unable to lend. On Friday, the benchmark Shanghai index closed 0.52 percent lower. Zhang Zhiwei, an economist for Nomura Securities in Hong Kong, said China\'s monetary policy stance had not changed despite talk of the liquidity injection. \"Recent action by the PBoC reflects the government\'s determination to take aggressive action to contain financial risks,\" he said. \"The monetary policy stance will remain tight.\" The Bank of China, one of the country\'s \"Big Four\" banks, denied a media report it was unable to complete transactions due to a fund shortage, the official Xinhua news agency said late Thursday. But Fitch Ratings on Friday said some Chinese banks could face constraints in meeting payment obligations later this month because of tight liquidity. \"The Chinese authorities have the ability to address the liquidity pressures, but their hands-off response to date reflects in part a new strategy,\" the ratings agency said in a statement. \"Such an approach also increases repayment risk among banks, and raises the potential for a policy misstep and/or unintended consequences,\" it added. Chinese banks have already scaled back lending in May from April, official figures showed, prompting analysts to warn of threats to economic growth. \"The (PBoC) is worried by the unsustainable growth rate of credit and is sending a message that market participants should not take for granted that they will always have access to cheap interbank loans,\" Capital Economics said this week.