Will the BOC cut or hold?:  Spoiler: They’ll hold. Canada’s central bank is slated to announce its latest policy decision this morning, and while no change in the target rate is expected, we’ll be parsing through the statement and listening intently to the accompanying press conference for clues as to which way the central bank is leaning. The latest Canadian CPI data showed that Canada’s official inflation rate clocked in at 2.9 per cent in January, inside the bank’s broad range and within striking distance of the specific 2 per cent target. That same month, however, the bank was still talking about how concerned it was about underlying inflation, and saying it needs to see a sustained easing before acting. Market expectations are that the bank will stay on the sidelines until June if not longer, but that can change in a hurry based on what the central bank says today.

Rate expectations: Speaking of central banks, U.S. Federal Reserve chair Jerome Powell will be worth keeping an eye on today, as the leader of the U.S. central bank is expected to testify in front of a duo of U.S. Congressional committees today and tomorrow. In his remarks to the House Financial Services Committee on Wednesday and to the Senate Banking Committee on Thursday, he’ll address a slew of financial topics including proposed rules forcing banks to hold aside more reserves on their books to guard against default, but just as is the case in Canada, the topic du jour will be interest rates, and when the Fed might be ready to inch its rate down from its current level, the highest in 23 years. The Fed and the BOC have been singing from the same songbook for months now, a perfect harmony of requests for more evidence that inflation is coming down before acting. But with the relative strength of the U.S. economy compared to Canada’s, it’s not hard to imagine a world where the Fed has the pipes to make the current “higher for longer” chart-topper a solo act.

Buy Canada, biz leaders tell pension plans: Several dozen prominent Canadian business leaders have signed an open letter urging the government to amend rules to encourage Canadian pension plans to invest more of their capital in Canada. In a letter to Finance Minister Chrystia Freeland, more than 90 prominent Canadian business leaders say they don’t want a hard cap on a mandate for domestic investments, but instead a tinkering of the rules to compel big pension plans like the CPP to put more of their money to work in Canada instead of overseas. The eight biggest pension plans in Canada are believed to have more money currently invested in China than they do in Canada, according to the letter published in newspapers across Canada on Wednesday. The campaign is being led by Montreal money manager Letko Brosseau & Associates, who have previously lamented to BNN Bloomberg that Canada’s big pension plans currently deploy only a fraction of the capital they used to put to work in Canada. Given the stakes for Canada’s economy, this is one movement worth watching.

CPP scales back in China: The Canada Pension Plan Investment Board has cut about 10 per cent of its Hong Kong staff focusing on China-based equities, Bloomberg reports. The cuts are only about a dozen people, so the shuffle likely doesn’t move the needle much in absolute terms. But it’s a nonetheless fascinating development to watch, as it’s the latest instance of a major Canadian pension plan pumping the brakes in the region. In January of last year, the Ontario Teachers Pension Plan paused its investments in private assets in China, and a few months later in May B.C.’s public pension manager did the same. It’s perhaps too early to tell if CPP’s move represents a minor reshuffling or major policy shift, but the pension plans aren’t the only ones scaling back on Chinese investments, which after years of torrid growth have become a global laggard this year as the country has been hit by a deep housing slump and sputtering economy.

Canadian banks far more oil invested than global peers: Canada’s biggest banks are more than twice as exposed to the fossil fuel business as their European and U.S. counterparts, Bloomberg reports. According to a report from climate change think tank InfluenceMap, Canada’s five biggest banks committed 18.4 per cent of their combined corporate lending and bond and equity underwriting to the sector. That far outpaces the seven per cent for European banks and six per cent for U.S. ones. While the InfluenceMap report is critical of the banks, considering Canada’s status as the world’s fourth-largest producer of crude, that lending activity is perhaps no surprise. But the Canadian Bankers Association notes in response that the data doesn’t incorporate developments past 2022 and therefore doesn’t capture the big banks’ recent progress on climate goals with specific targets.