The Bank of Canada (BoC) is expected to hold its key overnight rate steady on Wednesday, with economists and analysts hoping to get some direction on the timing of its first rate cut.

The central bank has kept borrowing costs on hold at a 22-year high of 5% for its last five consecutive meetings in its bid to bring inflation down.

It is widely expected to repeat it for the sixth time but markets will be eagerly sifting through Governor Tiff Macklem's speech for a hint of when it plans to pivot to a rate cut cycle.

With inflation showing signs of cooling since the beginning of the year and the latest job market survey pointing at build up of some slack, traders have increased their bets for a rate cut in June.

Economists and analysts expect to get some clarity from the central bank, which had said last month it was too early to consider cuts, on the direction of inflation, growth and the first 25-basis point rate cut.

"The key points to watch on Wednesday will be how Governing Council characterizes inflation and how their discussions about the near-term path of policy have evolved," Royce Mendes, head of macro strategy for Desjardins Group, wrote in a note.

The central bank's Governing Council will announce its monetary policy decision on April 10 at 9:45 a.m. (1345 GMT) when it will also come out with its quarterly monetary policy report giving projections on the economy and inflation.

Canadian economic data has diverged from its biggest trading partner, the U.S., and much of the growth seen south of its border has not trickled into the Canadian market.

This has prompted traders to forecast the first rate cut to begin in Canada with money markets betting there will be an 85% chance of a rate cut in June. The chances of a mid-year rate cut in the U.S., however, has shrunk to 60%.

"We expect that the central bank's first rate cut will occur in June and that there will be a total of four this year ... but the tone of its statement (on Wednesday) will shift to dovish," said Tu Nguyen, economist with assurance, tax & consultancy firm RSM Canada.

In a Reuters poll, more than 70% of economists, 27 out of 38, expected the BoC to deliver its first rate cut in June, in line with market pricing. Seven predicted the first cut would come in July, and the remaining four said September.

While high interest rates have managed to ease inflationary pressures in the country from a high of 8.1% seen in June 2022 to 2.8% in February, it has increased mortgage cost, the most common debt held by Canadians. (Reporting by Promit Mukherjee; Editing by Sandra Maler)