Canadian businesses are cautiously optimistic as Bank of Canada survey shows less fear of worst-case tariffs scenario. Short-term inflation expectations are steady, and fewer firms are planning for a recession. Impact of U.S. tariffs contained to certain sectors, but uncertainty remains a concern for businesses.

Around one-third of firms expect higher tariff-related costs, down from two-thirds in the last quarter. Business leaders, especially exporters, have improved outlook. However, widespread uncertainty remains about the impacts of U.S. measures on the economy. Business outlook indicator hits lowest level in a year.

Quarterly survey shows 35% of firms report declining order book indicators. Investment intentions remain low and below long-term average. Analysts suggest survey will influence central bank’s rate decisions. Bank of Canada has kept key rate at 2.75% since April, with only 12% chance of rate cut on July 30.

Consumer expectations survey reveals 64.5% of Canadians expect recession in next 12 months, down from 66.5% in Q1. Trade conflict causing cautious spending habits, with many choosing to support Canadian goods and local vacations. Uncertainty continues to impact both businesses and consumers.

Read more at Yahoo Finance: firms less worried by worst-case tariff scenarios