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Bank of Canada Governor Mark Carney speaks to the Canadian Club Of Toronto after being named the 2012 Canadian Of The Year in Toronto, May 1, 2012.Mike Cassese/Reuters

Mark Carney will almost certainly leave his benchmark interest rate at 1 per cent again on Tuesday, extending the Bank of Canada's longest stretch of stable borrowing costs since the 1950s.

A big question, though, is how far the bank Governor will go in dialling back the semi-hawkish turn he and his policy team took in mid-April. In that April 17 decision, they upgraded their outlook for the domestic and global economies, reiterated their warnings about household debt, and declared that rate hikes might soon "become appropriate," without elaborating.

That was the clearest hint about rate increases since July, 2011. But that signal was forgotten a month later, as debt dramas in the U.S. and Europe roiled markets. By September, policy makers were saying the need to hike had "diminished."

With the European crisis now careening out of control, the U.S. economy sputtering, and China slowing more than expected, a similar reversal is possible. At the same time, Canada had big monthly job gains in March and April, and there are worries that Mr. Carney's low-for-long rate stance may be inflating a bubble in some of the country's hottest housing markets.

The trick will be to give a nod to the much-shakier backdrop, without undercutting the bank's repeated warnings that rates will eventually rise so households should rein in their borrowing.

Here's what to look for in Tuesday's central bank statement:

Global backdrop

The statement could paint a grim picture, judging by an assessment last week from the Financial Stability Board, the Group of 20-linked body that Mr. Carney chairs: "After a period of calm in financial markets earlier this year, tensions have increased more recently and risk aversion has returned to elevated levels," it said. "Against this background, risks of adverse spillovers to global financial markets and economies have increased."

Domestic conditions

First-quarter economic growth came in at a 1.9-per cent annual pace, well off Mr. Carney's April estimate of 2.5 per cent, and some economists say his projections for the rest of 2012 may also be too rosy. The first-quarter data suggests that the spare capacity in the economy is not disappearing as quickly as Mr. Carney had thought. If he says nothing new about the timeline for the slack to be chewed up, and instead emphasizes recent job gains and/or household debt, that would be a hint that his timeline for rate hikes (whatever it is) has not changed much.

The last paragraph

Policy makers finished their April statement by pledging to weigh the "timing and degree" of any moves "carefully against domestic and global economic developments." That's enough wiggle room that Mr. Carney could easily repeat most of the April language. A full reversal à la 2011 seems less likely because, given the concerns about debt and the housing market, it's not as clear that the need to raise rates has diminished, even though external events are restraining the central bank's capacity to do so.