* Bank Indonesia raises benchmark rate 25 bps to 7.25 percent
* Rupiah recovers off 4-1/2 year low, still 15 percent down since start of year
* New Zealand, South Korea and the Philippines hold rates steady
* Central banks waiting to see if Fed orders dollar printing presses to slow
By Rieka Rahadiana and Naomi Tajitsu
JAKARTA/WELLINGTON, Sept 12 Bracing for more turmoil if the U.S. Federal Reserve scales back its economic stimulus next week, Indonesia hiked interest rates to shore up its ailing currency, but elsewhere in Asia-Pacific policymakers less afraid of capital outflows held steady.
Bank Indonesia's surprise increase in three key rates on Thursday helped the rupiah bounce off a 4-1/2 year low, but it is still Asia's worst performing currency so far this year, having lost around 15 percent of its value against the dollar.
Having come through the past few months of a fierce emerging markets sell-off largely unscathed, New Zealand, South Korea and the Philippines all left rates unchanged as expected, though they are at different stages of their economic cycles.
The Fed is widely expected to announce a reduction in its quantitative easing on Sept. 18, to start bringing the curtain down on nearly five years of super-easy dollars.
Investors have been expecting the move for months, so the impact on markets should be less when it happens.
"Is the emerging market sell-off over? Likely not," said a recent research note by Credit Agricole, though it added that the pressure may moderate as U.S. bond yields rise at a slower pace and as economic recoveries in the U.S. and Europe support exports from emerging economies.
While emerging markets have taken a beating in the last few months, some have since steadied. But others like Indonesia and India, dependant on capital inflows to fund large current account deficits, remain vulnerable to further capital outflows.
"We believe that the current bout of currency volatility is nearing an end and that a prolonged reversal of capital flows is unlikely. As such, we think further aggressive rate hikes in Indonesia will be unnecessary," said Gareth Leather, economist at Capital Economics Asia.
"Nevertheless, uncertainty about the timing of eventual policy tightening by the (U.S.) Fed could trigger further bouts of volatility, prompting further rate hikes in Indonesia."
The majority of economists polled by Reuters had expected BI to hold rates. In the event, it pushed up its benchmark rate by 25 basis points to 7.25 percent..
The central bank said the moves were designed to dampen inflation, bolster the currency and ensure its current account deficit was at a sustainable level.
Bank Indonesia has now hiked its benchmark rate by a total of 150 basis points in a series of increases since June, when the exodus from emerging markets gathered critical mass.
BI also lowered its forecast for growth this and next year to 5.5-5.9 percent and 5.8-6.2 percent, respectively.
A current account deficit equivalent to 4.4 percent of gross domestic product, and inflation surging to almost 9 percent has drained investors' confidence in Southeast Asia's biggest economy.
India is in a similar fix, only with weaker economic growth. Reluctant to raise interest rates that could exacerbate the economic slowdown and drive up the cost of government borrowing, the Reserve Bank of India has delayed its policy meeting until two days after the Fed meets.
NEW ZEALAND HAWKISH FOR 2014
How the Fed sequences the winding down of its quantitative easing programme will set the rhythm for other global central banks as they juggle the objectives of supporting growth, controlling inflation and maintaining financial stability.
"Growth expectations have been revised down for India, emerging Asia and Brazil as their monetary policy will have to be tighter than would have been the case if there had been a more gradual market adjustment to the Fed's planned moves," Alan Oster, group chief economist at National Australia Bank in Melbourne.
"Fortunately, Chinese growth has held up and its economy is one-and-a-half times the size of India, Brazil and Indonesia combined."
Worries over whether the conflict in Syria will spread, lighting a fire under oil prices, are also out there.
"How events unfold over the coming weeks could significantly change the global environment," the Reserve Bank of New Zealand (RBNZ) warned in its monetary policy statement.
The central bank sounded a surprisingly hawkish note on its outlook for rates, signalling they would start to rise by mid-2014 and sending the domestic currency to a four-week high.
Announcing it was keeping its official cash rate at a record-low 2.5 percent, RBNZ also raised its outlook for 90-day bank bill rates to 3.0 percent in the June 2014 quarter, indicating that rates may rise by 25 basis points by that time. That is sooner that it suggested in its previous statement.
"(Official cash rate) increases will likely be required next year," RBNZ Governor Graeme Wheeler said in a statement, repeating his pledge to keep rates unchanged in 2013.
He added that U.S. Fed tapering could take off some upward pressure in the New Zealand dollar, which hit a post-float high against a currency basket earlier this year.
New Zealand also has a current account deficit, but it has a sound credit rating, inflation at 0.7 percent is a 14-year-low, and its economy is regarded as fairly resilient.
KOREA, PHILIPPINES STEADY
At 2.5 percent, the base rate in South Korea is near a record low, and the central bank's decision to maintain its easy monetary policy was expected as it has been supporting the government's fiscal stimulus.
Rock steady on Thursday, the Korean won has lost just 1 percent of its value against the dollar this year, giving the central bank confidence that the country's highly open capital markets can weather whatever the Fed does.
Asia's fourth-largest economy grew by a modest 1.1 percent in the second quarter from the preceding quarter, the fastest growth the export-focused economy has shown in more than two years, and inflation is below target.
"The Committee expects that the domestic economy will maintain a negative output gap for a considerable time going forward, although it forecasts that the gap will gradually narrow," the Bank of Korea said in its policy statement.
Also keeping its rates on hold, the Philippines central bank said it expects inflation to remain subdued into 2014, despite the peso's declines and pressure from volatile oil prices.
Most economists see the central bank holding rates for the rest of the year, with economic growth expected to hit around 7 percent this year.
"The economy does not need additional support for now," said Jose Mario Cuyegkeng, economist at ING Bank in Manila.