UPDATE 1-Philippine holds rates steady but maintains dovish tone

* BSP keeps RRP rate at record-low 2.0%

* Central bank says inflation to remain within target

* Rates cut by total of 200 bps this year (Adds quotes, inflation forecasts, background)

MANILA, Dec 17 (Reuters) - The Philippine central bank left key interest rates steady at its last policy meeting in 2020 after a series of rate cuts earlier in the year aimed at reviving a pandemic-hit economy, but signalled readiness to take further action if needed.

The Bangko Sentral ng Pilipinas (BSP) kept the rate on the overnight reverse repurchase facility at a record low of 2.0% on Thursday, in line with market expectations.

The rates on the overnight deposit and lending facilities were likewise kept at 1.5% and 2.5%, respectively.

“The Monetary Board is of the view that monetary policy settings remain appropriate,” BSP Governor Benjamin Diokno said.

“An accommodative monetary policy stance, together with sustained fiscal initiatives to ensure public welfare, should quicken the economy’s transition toward a sustainable recovery,” he said.

The BSP slashed rates by a cumulative 200 basis points this year, including a surprise 25 bps reduction last month, making it one of the most aggressive central banks worldwide in policy easing.

It has also provided additional liquidity support to the economy by purchasing government securities and extending loans to the government.

Still, Diokno said the central bank “remains committed to deploying its full range of instruments as needed” to support an economy that shrank more than expected in the third quarter on an annual basis, hit by tepid demand and government spending.

The sluggish domestic demand has kept inflation largely manageable.

The BSP raised its inflation forecasts to 2.6% this year from 2.4% previously, and to 3.2% for next year from 2.7%, still well within the target range of 2%-4% for both years.

“We believe the BSP is slowly running down its available space to cut rates although we do not count out future rate cuts especially if economic activity remains subdued early on in 2021,” said Nicholas Mapa, a senior economist at ING. (Reporting by Neil Jerome Morales and Enrico Dela Cruz; Editing by Sam Holmes, Alison Williams and Raju Gopalakrishnan)