Preview of the Bank of Canada interest rate decision on April 18, 2018

The Bank of Canada is suddenly a bellwether.

Central banks are having a moment of doubt. This was supposed to be the year of global synchronized growth and steadily tightening policy everywhere.

So far, the returns have been disappointing. Economic data almost everywhere has been softer-than-expected. A cursory look at the Citi economic surprise index shows that most of the world is below the water line.

Canada, you'll note is far down the list after a handful of economic data reports missed estimates. Recent ones include retail sales (+0.3% vs +1.1% exp), GDP (-0.1% vs +0.1% exp) along with a series of housing numbers.

It looks like it could be a return of the 'serial disappointment' that Poloz began lamenting since 2014.

But the BOC certainly isn't ready to admit any defeat. Not even close. Recent numbers on CPI and jobs were upbeat. One of the things that kicked off the latest Canadian dollar rally was the Bank of Canada's Business Outlook Survey. It's a report that policymakers are increasingly using as a guide and a signal.

In the latest version, investment intentions edged lower but there were a series of signs of capacity pressures. Notably, 56% of firms see inflation 2% or higher in the year ahead compared to 38% previously.

That might be explained by the minimum wage hike and commodity prices but the BOC could be spooked.

As for market participants, there is little confidence in anything related to the BOC after a series of confusing, unexpected moves over the past year. For this meeting, the OIS market is pricing in an 18% chance of a hike. If it comes, the Canadian dollar will surge and that means USD/CAD will crumble, probably down to the Feb low of 1.2260.

If there's no move, the knee-jerk reaction will be higher -- probably to 1.2600 -- but afterwards it will depend on the communication in the statement. Hints about the subsequent meeting will be critical.

The implied odds of a June hike are 48% so the market could swing either way.

My expectation is that the BOC will be cautious. A NAFTA deal isn't yet done and they would have to be whipsawed if the deal fell apart.

In addition, Poloz has recently said that Canada might be able to handle more growth without inflation. And more importantly, that the central bank may give that a chance to happen.

"We cannot know in advance how far capacity-building process can go but obliged to let it occur," he said, adding that another half-million workers could enter the economy.

That same question is challenging central banks globally. They all have a strong degree of optimism that inflation is coming -- at least publically -- but they are increasingly divided on whether it's a good idea to prematurely tighten.

So while Wednesday's decision could undercut the Canadian dollar, it might just be a sign of what's to come from other central bankers later.

Note that this decision includes a press conference 45 minutes after the statement at 11:15 am ET. That could restrain any initial moves as the market waits for clarity.

Poloz and Wilkins will also testify at the House of Commons on April 23.