Economists expect divergent monetary policy on either side of the border on Wednesday when the Bank of Canada and Federal Reserve make interest rate announcements.

With positive economic data on the home front, rate cuts likely won’t come from the Bank of Canada.

Canada’s central bank lacks the required signals to ease, given that growth over the past year is “only a hair below potential, and inflation is on target,” said CIBC chief economist Avery Shenfeld in a report on Friday.

Shenfeld added that the central bank’s commentary accompanying its announcement will leave the door open for a cut if, as he expects, global headwinds negatively affect growth in the coming months.

In contrast, “Talking too hawkishly now risks sparking an unwelcome tightening on trade” through a loonie appreciation, he said.

Shenfeld calls for a 25-basis-point cut from the Bank of Canada in January, putting the central bank’s key rate at 1.50%, from its current 1.75%.

In a report on Thursday, the C.D. Howe Institute’s monetary policy council recommended that Canada’s central bank stand pat this month, with a potential 25-basis-point cut by April 2020.

The recommendation reflects the council’s view that the central bank’s current stance is “appropriate” given the condition of the Canadian economy, with its “moderate” economic growth.

However, “a troubled world economy will likely warrant easing before long,” the institute said in its report. It cited weak business investment and productivity growth as headwinds to the country’s economic potential. Also, global economic indicators are weakening — “trends likely to hurt Canadian exports and business confidence over time,” it said.

Further, with easing expected from the Federal Reserve, a cut in the Bank of Canada’s overnight rate would likely be appropriate to limit upward pressure on the loonie, it added.

A Fed rate cut could come in time for Halloween — though the Fed has communicated little about its intentions since it cut its rate in September.

With two dissenting voices on the Federal Open Market Committee (FOMC) last month and a dot plot, or rate forecast, indicating that a minority of FOMC members advocated another cut before year-end, it appeared the Fed was hinting it would stand pat in October and wait for evidence of a further slowing before moving again, most likely in December, said Shenfeld in the CIBC report.

Evidence to support an October cut hasn’t appeared. For example, “Stocks haven’t nosedived,” Shenfeld said, and “10-year yields also sit close to levels prevailing at the last FOMC meeting.”

Still, Shenfeld noted that the futures market tilted toward “heavy odds” of an October cut after September’s announcement, and the Fed hasn’t tried to communicate that the market is mispriced. As a result, the Fed seems likely to cut now and announce a pause in December, he said.

What really matters is that this is likely the last rate cut for this mid-cycle adjustment, he added. Whether the cut comes now or in December, “we’re looking for some brightening in global trade risks in early 2020, and enough sustained domestic demand, for the Fed to conclude over the winter that they’ve done enough,” he said.

The Fed’s target rate is currently 1.75-2%. Odds for a 25-basis-point rate cut in October stand at more than 93%, according to the CME FedWatch Tool.

For full details, read the reports from CIBC and the C.D. Howe Institute.