* Time has come to act and raise interest rates - Belka
* Hike should signal start of cycle, not be seen as one-off
* Gradual tightening should help zloty gains to cap CPI
* Poland should further limit FX loans
By Karolina Slowikowska and Pawel Florkiewicz
WARSAW, Jan 4 (Reuters) - It is time for Poland's central bank to begin a gradual monetary tightening cycle to help strengthen the zloty and cap inflationary expectations, the bank's governor, Marek Belka, said on Tuesday.
"The time for observing the situation in monetary policy is ending. I definitely believe that rates should be raised pre-emptively, not just in case," Belka told Reuters in an exclusive interview.
Belka's comments came one day after MPC member Andrzej Kazmierczak, who has previously resisted interest rate rises, told Reuters an increase in borrowing costs may be necessary.
Both Belka and Kazmierczak voted against a motion to hike interest rates by a hefty 50 basis points last August, the last month for which individual voting records have been published. That motion was defeated by six votes to four.
"I believe that such a move should be gradual. A significant hike could be interpreted as a one-time move but it is about building market conviction that we are dealing with a cycle," said Belka, who heads the 10-member Monetary Policy Council (MPC) and has the casting vote in the event of a tie on the panel.
Asked whether such a rate increase could take place as early as the next MPC sitting on Jan. 18-19, Belka said:
"If other "Irelands" happen then a rate hike would not achieve its goal and would not initiate zloty appreciation. For such a hike to initiate this process and be effective, it must take place at a time of stable markets."
Poland's central bank has been in a wait-and-see approach for months now and analysts expect higher borrowing costs in the first quarter but are split on the exact timing of a hike.
The bank's key rate has stood at a record-low of 3.5 percent since June 2009.
Inflation probably picked up to 3.1 percent last month, the finance ministry said on Monday, up from 2.7 percent in November, and is expected to accelerate in the new year, due partly to increases in value-added tax. [ID:nLDE7020FV]
The MPC also rejected proposals for a 50 basis point rate rise in September and October and for both 50 and 25 basis point increases in November, though it is not yet known how individual policymakers voted in those months. (Writing by Karolina Slowikowska; Editing by Ron Askew)