The Bank of Canada appears set to go its own way on an interest rate cut as the U.S. Federal Reserve maintains a hold position.

Tiff Macklem, the BoC’s governor, sent a strong signal Wednesday that the central bank could introduce a long-awaited reduction of its key overnight rate in June or July. Appearing before the Senate committee on banking, commerce and the economy, Macklem indicated that inflation has reached a point where the BoC is comfortable introducing a rate cut while the Fed stands pat.

The Canadian and U.S. economies are so closely linked that the two countries often walk hand-in-hand on economic policy. But this is a time when likely take different paths, Macklem indicated.

“We don’t have to do what the Fed does,” he told the committee. “We have our own monetary policy.”

His comments came on the same day that the Fed kept its federal reserve fund in the 5.25% to 5.5% range, maintaining a 23-year high. Jerome Powell, chair of the Fed, stressed the need to maintain a hold to keep inflation in line.

In light of the differing rhetoric, many analysts are predicting that the BoC will call its own shots on rate cuts. Macklem’s comments all but confirmed that the divergence will occur.

“What the Fed does has a big impact on us,” Macklem told the Senate committee. “Seventy-five per cent of our trade goes to the United States. So, the strength of demand in the United States impacts demand for Canadian exports, and our financial markets are very integrated. … But we have some differences, and we have the ability to take those into account as we run monetary policy.”

While Macklem faced questions about a rate cut, Powell fielded queries about a possible hike. The BoC boss indicated that the Canadian central bank does not want high mortgage costs to keep contributing to inflation.

Economists have cited high shelter costs tied to high interest rates an inflation driver.

“More broadly, our economy has been much weaker than the United States. Monetary policy looks like it’s having more traction in Canada,” Macklem told the senators.

Macklem said he and Powell have different views on how a rate could would affect inflation in their respective countries. The BoC is confident that inflation will continue to come down in the event of an interest rate cut, but the Fed has yet to gain confidence in U.S. inflation’s ability to withstand an interest rate reduction, Macklem added.

However, he said, the BoC will continue to monitor inflation before introducing a cut.

“I realize that most Canadians want to know when we’re going to lower our policy interest rate,” Macklem told the senators.

“The short answer is: We are getting closer.”