OTTAWA, Jan 16 Reuters Canada39;s annual inflation rate rose as expected in December, data showed on Tuesday, and underlying prices pressures remained, dashing hopes that the central bank would shift into ratecut mode early this year.

Annual inflation rose to 3.4 in December from 3.1 in November, matching estimates by economists polled by Reuters. On a monthly basis, consumer prices matched expectations as well and fell 0.3 from November.

One of the Bank of Canada39;s BoC39;s core measures of underlying inflation, CPItrim, edged slightly higher to 3.7 from 3.5 previously, while CPImedian stayed at 3.6.

Sticky core measures show that overall inflation is likely to come down slowly. Headline inflation has been higher than the BoC39;s 2 target since March 2021.

The stickiness in these core measures of inflation comes as a disappointment to Canadians hoping to see enough progress today to open the door to rate cuts, said Royce Mendes, head of macro strategy for Desjardins Group.

The BoC raised its key policy rate to a 22year high of 5 between March of 2022 and July of last year to tame inflation. The central bank39;s next interest rate announcement is on Jan. 24, when it is expected to keep its key policy rate on hold.

After the data, money markets saw a onethird chance that the BoC would start cutting interest rates in March, down from nearly 50 before the figures were released, but they still see a high chance of a 25basispoint reduction in April.

An awful lot has…