Canada's annual inflation in April slips to 2.7%

(Reuters) - Canada's annual inflation rate slowed to a three-year low of 2.7% in April, matching expectations, and core measures continued to ease, data showed on Tuesday, likely boosting chances of a June interest rate cut.

Analysts polled by Reuters had forecast inflation to cool to 2.7% from 2.9% in March. Month on month, the consumer price index rose 0.5% in April, also less than a forecast of 0.6% gain.

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COMMENTARY

KYLE CHAPMAN, FX MARKETS ANALYST AT BALLINGER GROUP

"This is another soft report and steady disinflationary progress has been evident for several months now. There is no longer any question about the trajectory, and the Bank of Canada is out of excuses to dither and wait for further confirmation to cut at the June meeting."

"More of the same positive signals is what they wanted, and that is exactly what they have received with this report. No matter which variant of CPI you look at, the Canadian economy looks to be cooling off broadly, and all inflation measures are now within the tolerance band."

"The positive jobs data is the only spanner in the works for the June call, but I don't see this as sufficient to tip the balance towards July, particularly given that it is barely keeping pace with immigration and that the bulk was down to part-time jobs."

DEREK HOLT, VICE PRESIDENT OF CAPITAL MARKETS ECONOMICS, SCOTIABANK

"It is four soft months in a row that matters the most. So it does add to the risk of June rate cut. The (the Bank of Canada) governor is going to be under pressure to cut rates. My bias is that four months isn't meeting the high enough hurdle to cut rates just yet especially since the Bank of Canada got massively surprised on the upside so it is too early to bring out the pom poms. The governor has a dovish bias in my opinion."

"To be honest, if I were the governor of the Bank of Canada, I would stay on hold for the whole year. And I feel that strongly. I don't think that we have enough evidence that we've licked inflation just yet. And I'd want to set a much higher bar...I think there is high odds that it will go in q3."

ANDREW GRANTHAM, SENIOR ECONOMIST, CIBC CAPITAL MARKETS

"Today's data should have provided the all clear on the inflation front that the Bank of Canada needed to start cutting interest rates in June."

"At the time of the April interest rate decision, the Bank of Canada Governor stated that policymakers were encouraged by recent subdued inflation readings, but needed those to persist for longer before cutting interest rates. Since then we have received two more months of data pointing to tame underlying inflation, for a total of four in a row, and because of that we continue to forecast a first rate cut at the next meeting in June."

DOUG PORTER, CHIEF ECONOMIST, BMO CAPITAL MARKETS

"Another reasonably good number from Canada. I would characterize this as not bad, not bad at all. It's fairly encouraging the fact that every major measure of core is now below 3% as is the headline."

"This is in reality the fourth report in a row this year from Canada that's at least as good as expectations if not better, so the encouraging trend continues."

"We've had a June cut in our forecast since late last year and I think this is good enough to stick to that. I don't say that with a lot of conviction of course but I think there is enough here, if the bank feels the need to cut rates, I think this is low enough to provide reasonable cover."

(Reporting by Fergal Smith, Divya Rajagopal; Editing by Denny Thomas)