(April 20 – 11:05 ET) – The latest report on Canadian consumer inflation came in at the low end of expectations. That clears the way clear for further rate cuts says BMO Nesbitt Burns Inc.

Energy prices continued to drive inflation higher, but at a lower rate than in previous months. The bigger story in today’s report was the better-than-expected result on core inflation, which excludes energy increases, says Nesbitt Burns. The year-over-year trend slid to 1.7% from 2.0%. The consensus expectation was for another 2.0% rise.

“This calm reading leaves the door swinging wide open for the Bank of Canada to cut interest rates further,” says BMO, “especially after this week’s reports of big declines in manufacturing shipments and exports in February.”

Overall, BMO concludes that the report should be read as, “A slightly better than expected result, especially for core inflation. With the dollar on a firmer footing, and the domestic data softening, the Bank of Canada has a free hand to chop rates.”