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* EM stocks track Wall Street rally as Fed rate cut chances rise
GDP data, disagreement on c.bank mandate weigh on rand
* Polish zloty steady ahead of c.bank rate meeting
* Volumes low as most Asian markets closed for Eid
By Susan Mathew
June 5 (Reuters) - Emerging market stocks rose in holiday thinned trade on Wednesday as they took heart from Wall Street's rally overnight spurred by comments from U.S. central bank officials which hinted that an interest rate cut may be in the offing.
With many markets in Asia closed for the Eid-al-Fitr religious holiday, MSCI's index of emerging market shares rose 0.3% to its highest in 2-1/2 weeks in low volumes.
Lower borrowing rates bode well for stocks as investors tend to dump equities in a rising interest rate environment due to higher cost of capital and better returns on bonds.
U.S. stocks rallied on Tuesday after Federal Reserve Chair Jerome Powell dropped his reference to the Fed's "patient" stance in approaching any rate decision, and said instead the central bank was watching fallout from the global trade war and would react "as appropriate."
Hong Kong stocks rose 0.5%, while mainland China shares closed flat after trading higher for most of the session. Just as markets closed, the International Monetary Fund cut its 2019 economic growth forecast for China on heightened uncertainty around trade frictions.
South African stocks rose 1% to their highest in more than three weeks. Data on Tuesday showing South Africa's economy contracted much more than expected in the first quarter prompted speculation of an interest rate cut by the central bank.
The rand slipped 0.8%, extending Tuesday's slide when the currency shed up to 2.2% after the shock GDP data.
Signs of disagreement within the ruling party in deciding whether to expand the central bank's mandate to include job creation and economic growth along with its current focus - inflation - also weighed on the rand as it raised questions on the bank's autonomy.
It raises doubts also on the president's authority after he argued for central bank independence last year and thus points to political uncertainty, wrote Commerzbank analysts in a note.
Cristian Maggio, head of EM strategy at TD Securities, expects a 25 basis points rate cut in the July meeting in South Africa, and wrote in a post GDP data note on Tuesday, that the data increases the chance of another rate cut this year.
Poland's zloty was little changed and held near one month highs ahead of a central bank interest rate meeting on Wednesday, when the rate is expected to be kept unchanged.
"This meeting would have been more interesting had yesterday's euro zone core CPI data not surprised to the downside," said Commerzbank analysts. "We cannot imagine that the Polish central bank will face any pressure to turn hawkish now."
In focus on Thursday will be the European Central Bank meeting, with investors looking to see how concerned policymakers are about signs of a downturn in growth. For GRAPHIC on emerging market FX performance 2019, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance 2019, see https://tmsnrt.rs/2OusNdX
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For CENTRAL EUROPE market report, see
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For RUSSIAN market report, see (Reporting by Susan Mathew in Bengaluru Editing by Keith Weir)