OTTAWA, May 16 Reuters Canada39;s annual inflation rate rose in April for the first time in 10 months, data showed on Tuesday, adding pressure on the central bank to raise interest rates again after having paused its tightening campaign since January.

Annual inflation unexpectedly rose to 4.4 in April, Statistics Canada said. Analysts polled by Reuters had expected the annual rate to edge down to 4.1 from 4.3 in March. Monthovermonth, consumer prices gained 0.7 from March, higher than the forecast 0.4 increase.

The market is underpricing the probability the Bank of Canada comes back and hikes again, said Derek Holt, vice president of capital markets economics at Scotiabank. I don39;t see any slowing down in terms of the underlying price pressures.

The Bank of Canada BoC has kept rates unchanged at its last two policy setting meetings as it assesses whether its eightconsecutive rate hikes have been sufficient to tame inflation, which peaked at 8.1 last year.

BoC Governor Tiff Macklem has said that Canadian inflation risks getting stuck significantly above the Bank of Canada39;s 2 target, and if that happens the central bank is ready to raise interest rates further.

Money markets moved to price in a 22 chance of a Bank of Canada rate increase at its next policy meeting on June 7, up from about 10 before the data.

Markets are still underweighting the possibility of an insurance hike on June 7th, especially in the context of BoC communications that prioritised the…