China"s central bank injected funds into the financial system through medium-term loans on Wednesday, while keeping the interest rate unchanged for the 20th month in a row. The People"s Bank of China (PBOC) said it was keeping the rate on 500 billion yuan ($78.5 billion) worth of one-year medium-term lending facility (MLF) loans steady at 2.95%. The PBOC"s earlier decision to lower banks" reserve requirement ratio (RRR) also came into effect on Wednesday, freeing up 1.2 trillion yuan worth of long-term funds, the central bank said in an online statement. read more "The larger-than-expected injection confirms the PBOC"s vow of ample liquidity into next year," said Xing Zhaopeng, senior China strategist at ANZ. "The unmoved rate indicates the prudent tone of monetary policy. However, in the counter-cyclical setting, the authorities will be open to a rate cut if necessary. We believe the PBOC will be in a wait-and-see mode going forward." Some market analysts and traders said they see a chance for a marginal reduction to the lending benchmark Loan Prime Rate (LPR) due next Monday, despite the steady MLF rate. "One-year LPR rate may drop 5 basis points(bps)," analysts at Goldman Sachs said in an earlier client note. "According to the PBOC, the July and December RRR cuts reduce bank costs by 28 billion yuan combined. By our calculation, this is enough to reduce 1-year LPR rate by 5 bps. At the same time, we do not expect the 5-year LPR rate or policy rates such as OMO and MLF rates to change." The central bank also injected another 10 billion yuan worth of seven-day reverse repos into the banking system, offseting the same amount of such short-term liquidity operations due on Wednesday. ($1 = 6.3671 yuan) Reporting by Winni Zhou and Andrew Galbraith; Editing by Tom Hogue and Lincoln Feast. Our Standards: The Thomson Reuters Trust Principles.