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Is bad-news-as-good-news for stocks near an end?

In the face of a global economic slowdown, Wall Street has been largely able to keep its footing because of the "bad news is good news" dynamic that's keeping the Federal Reserve on hold, market watchers said Wednesday.

"It's tough to find a growth rate in the economy that's going to be sustainable for the stock market," Jim Paulsen, chief investment strategist at Wells Capital Management, told CNBC. "But if it keeps up being weak, that's going to become an issue."

The Fed is set to end its two-day October meeting Wednesday afternoon with its policy statement. No change in interest rates is expected.

"What you're really looking for is a statement of how glued they are to waiting or postponing, or are they still open to changing their mind and maybe lifting rates before the end of the year," he said.

"One of the biggest things that could cause them to change would be if the inflation numbers ... were to pop up. That would really put the Fed in a real difficult [position]," said Paulsen, who's been warning for a while now about the potential for a pickup in inflation.

But Michael Farr, CEO of investment firm Farr, Miller & Washington, sees the inflation landscape differently.

Appearing with Paulsen on "Squawk Box," he said he's taking the Fed at its word.

"After the last statement, they said they don't expect to hit their 2 percent inflation target until 2018. That was really discouraging to me," he said. "We could see some short a blip in the data. But they don't see a long-term trend change there."

The futures market is starting to look beyond the Fed's December meeting, putting greater odds on early 2016 for the central bank's first rate hike in nine years.

"I really wish they would put up or shut up. Enough of this talking and promising about we are going to raise," Farr said. "I think they've painted themselves into a corner. I think they've waited too long."

"I wish they would get it over with. I don't think they're going to," he continued. "And I think markets are going to like it."

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