BEIJING - China's central bank on Tuesday injected fresh funds via its medium-term lending facility (MLF) to keep liquidity stable.

The People's Bank of China (PBOC) pumped 399.5 billion yuan (about $60 billion) into the financial system via MLF. The interest rate for one-year MLF loans was unchanged at 3.2 percent, the central bank said in a statement on its website.

It skipped daily reverse repo sales on Tuesday, after pumping 210 billion yuan into the banking system through reverse repos the previous day.

The MLF tool was first introduced in 2014 to help commercial and policy banks maintain liquidity by allowing them to borrow from the central bank by using securities as collateral.

Maturing MLF will drain a total of 287.5 billion yuan from the market in August, including one-year MLF loans of 137.5 billion yuan and 6-month MLF loans of 150 billion yuan. Tuesday's lending resulted in a net injection of 112 billion yuan of medium to long-term funds this month.

The fact that Tuesday's operation consisted of only one-year loans signalled that the PBOC is trying to guide longer-term interest rate through MLF, said CITIC Securities in a research note.

The PBOC's open market operations are closely watched by the market, as they have become major tools for the central bank in pursuing its monetary policy.

Such a policy stance is crucial for China as it has to juggle the task of financial deleveraging, aimed at defusing risk and curbing asset bubbles, while shoring up the economy.

As the central bank continues to implement the prudent and neutral monetary policy, the bond market will likely gain momentum, said CITIC Securities.