* Benchmark rate kept at 7.50 pct, as expected in Reuters poll
* Current-account deficit at 3.5 pct of GDP in 2013 - c.bank
* Hopeful c/a deficit below 3 pct in 2014 - c.bank
By Rieka Rahadiana and Nilufar Rizki
JAKARTA, Jan 9 (Reuters) - Indonesia's central bank left its key reference rate unchanged on Thursday, as expected, as the country's current account deficit narrowed but said it would stay on guard against the risk of capital outflows from U.S. tapering.
Growth in Southeast Asia's largest economy cooled to its weakest in four years last year hit by outflows and a weak trade balance. The central bank also implemented hefty interest rate increases to defend the rupiah which sank to 5-year lows.
Eight out of 11 analysts in a Reuters poll had expected the central bank to keep the benchmark rate on hold at 7.50 percent for now, and possibly raise sometime in the first quarter.
"Do not rule out the probability of a BI rate hike this year," said Leo Rinaldy, an economist at Mandiri Sekuritas. "We see further room for an increase in the BI rate, albeit limited, to maintain stability in the rupiah."
The central bank also kept the deposit facility rate, or FASBI, and lending facility rate unchanged at 5.75 percent and 7.50 percent, respectively.
Asia's central banks are keeping a close eye on how U.S. monetary tapering will affect global fund flows and financial markets. Earlier on Thursday, South Korea's central bank held its policy rate steady, standing back to gauge the impact of the Federal Reserve dialing back stimulus.
"(U.S. tapering) will certainly have an impact and we have to remain vigilant," Bank Indonesia Governor Agus Martowardojo told reporters.
The Indonesian rupiah barely reacted to the policy rate announcement, trading at 12,185 to the dollar. It fell nearly 21 percent against the dollar last year, forcing Bank Indonesia to spend $13.4 billion of its foreign exchange reserves to defend Asia's worst-performing currency.
The G20 economy is among the most vulnerable countries to the risk of capital outflows due to its large current-account deficit that hit a record of 4.4 percent of gross domestic product in the second quarter of 2013.
Central bank deputy governor Perry Warijiyo said the current-account deficit for 2013 was 3.5 percent of GDP. He said he was hopeful the current-account gap would be less than 3 percent in 2014.
In an attempt to restore investor confidence and narrow the current-account deficit, Bank Indonesia aggressively lifted its reference rate by a total of 175 basis points since June.
But in spite of successive interest rate hikes and slowing growth, a survey on Monday showed consumers grew more optimistic in December, indicating an improvement in wages and consumption.
November's retail sales also posted the highest growth since July and consumer demand could rise further as Indonesia gears up for parliamentary and presidential elections.
Despite encouraging trade data and a moderation in the economy, some analysts see the possibility that interest rates could be raised in the first quarter to ease pressures on the rupiah from deteriorating exports and sudden capital outflows.
Rinaldy who expects room for further increases said: "As inflationary risk is expected to remain low owing to the normalisation post-subsidised fuel price hike, the direction of BI's monetary policy will be mostly impacted by the development of trade balance and balance of payments data."
Indonesia, which constantly posted above 6 percent annual growth, expanded 5.7 percent in 2013 - the slowest pace in four years - due to weak global demand and slowing investment.
The central bank governor added that growth was expected at the lower end of a range of 5.8 to 6.2 percent this year.
Inflation hit 8.38 percent in 2013, the fastest pace since 2008, largely because of cuts in fuel price subsidies and the temporary disruption in supply when the government banned imports of certain foodstuff, but is moderating.
Additional reporting by Andjarsari Paramaditha; Editing by Jacqueline Wong