UPDATE 1-Polish central bank governor says rates should be cut

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WARSAW, March 13 (Reuters) - Poland's central bank should lower borrowing costs now to limit the economic impact of the coronavirus outbreak, governor Adam Glapinski said in a statement on Friday.

Glapinski said there were no liquidity problems in the Polish banking sector, but the central bank was monitoring the situation and was ready to take action.

"In my opinion, the Monetary Policy Council should support the economy by cutting interest rates already now," Glapinski said in the statement made to the local PAP news agency and published on the bank's website.

The next regular meeting of the rate-setting body is due in April.

One MPC member, Grazyna Ancyparowicz, told Reuters the panel holds a working meeting on March 17 and could discuss any proposals from Glapinski then. It was not immediately clear whether the council could decide to move on interest rates at that meeting.

The central bank was not immediately available to comment on whether an emergency meeting could be scheduled.

"At the same time, banks should allow borrowers to delay payments if their income declines," Glapinski said. "A cut in rates will immediately and directly lower credit costs."

Glapinski said he expected inflation to decline in coming quarters, falling below current expectations.

Driven in part by rising food and energy prices, Polish inflation rose to its highest level since November 2011 in February, reaching 4.7% year-on-year, statistics office data showed on Friday. Borrowing costs have been at a record low of 1.5% for five years.

"A decline in demand for services and non-food goods and a strong decline in commodity prices will mean that inflation will fall," Glapinski said.

Fiscal policy should also react, Glapinski said. "I am certain that the goal of fiscal policy, same as with monetary policy, should be to ease the effects of economic losses linked to the outbreak."

Glapinski has said repeatedly in recent months that rates should be kept steady, despite fast economic growth and high inflation, and dovish MPC members have outvoted hawks in January, the last meeting from which voting records are available.

One hawkish member, Kamil Zubelewicz, warned on Friday that rate cuts would "fuel panic and encourage people to take their savings out of the banking system.

"(A rate cut) would not calm the situation or lead people to borrow more," Zubelewicz told Reuters in reaction to Glapinski's comments. (Reporting by Justyna Pawlak, Anna Wlodarczak-Semczuk and Pawel Florkiewicz; Editing by Leslie Adler and Alex Richardson)