China’s central bank took a step toward modernity this week, laying the groundwork for a more market-based way of guiding the economy. But that doesn’t mean it will have an easier time boosting growth.

In a brief, confusing statement on the Twitter -like Chinese microblog Weibo, the People’s Bank of China said it is cutting rates on an obscure financial instrument, the standard lending facility. The announcement is more significant that it appears at first glance.

Rates on the SLF, a seldom-used channel for banks to tap liquidity from the central bank, will be cut to 2.75% for overnight loans, and to 3.25% for seven-day loans. It’s not entirely clear what these rates were before, but they had been previously quoted by the central bank at 4.5% and 5.5% — somewhat punitive rates that help explain why it was so rarely used.

More importantly, the PBOC said it would “explore” using these rates as the ceiling in an entirely new system—an interest-rate corridor.

In the past, the PBOC’s main tool to influence inflation and growth in China has been to dictate to banks the rates they set on deposits and loans. This year it fully scrapped rate controls, though it still publishes “benchmark rates” meant to guide bank behavior.

This leaves a problem. If deposit and lending rates are free floating, the PBOC has no remaining lever to wield its influence. As a result, the central bank has continued to give banks “window guidance,” essentially private instructions as to where it wants them to set rates.

The PBOC’s long-term plan will be modeled after the corridor systems used by the European Central Bank and others, which aim to keep short-term rates in a certain range. Longer-term rates are in turn influenced by short-term rates.

Such systems involve a ceiling rate that banks pay when they tap central-bank liquidity, and a floor rate that banks earn by parking excess funds with the central bank. Banks will naturally set the short-term rates at which they loan money to each other somewhere between the floor and ceiling.

The PBOC’s ceiling is clear. What about the floor? The central bank still hasn’t said, but economists figure it will likely be the rate that the PBOC pays on excess reserves, currently 0.72%. The new key benchmark rate will likely be the overnight or seven-day repo rate, say researchers at Capital Economics. The overnight rate is currently at 1.81%, right between the 0.72% floor and the 2.75% overnight ceiling.

Investors should welcome this transition. It will allow rates across the financial system to be more flexible, and determined less by government commands. This will allow more rational allocation of capital.

It doesn’t, however, mean that the PBOC will suddenly find it easier to stimulate growth in the near term. The effectiveness of interest-rate cuts will still be diluted by China’s debt overhang and capital outflows, especially if the PBOC remains determined to keep controlling the yuan exchange rate.

To drag China out of its funk, bolder moves are still needed.