Birmingham Chamber of Commerce and Industry yesterday called on the Bank of England to hold interest rates at 4.5 per cent when it makes its monthly decision today.
Most pundits expect the Bank will leave interest rates alone and for several months to come.
However there have been some calls for an early rise to choke off the threat that oil increases could start pushing up inflation, while house price growth has been strong in recent months.
James Cooper, policy adviser, at the BCI said: "UK plc is starting to show some encouraging signs. GDP growth is returning to its trend. Year-on-year growth rose to 2.2 per cent for the first quarter of 2006 compared to just 1.8 per cent for the 2005.
"Growth in the manufacturing sector, which has been weak for some time, rose to 0.7 per cent, its best performance since 1999, equalling growth in the services sector during the first three months of the year.
"The most important factor for the Bank's Monetary Policy Committee is the rate of inflation, which is currently undershooting the Govern-ment's two per cent target. This is also a positive factor.
"There could, however, be some dangers on the horizon. We continue to urge the MPC to remain vigilant to the inflationary pressures that could be caused by the current high-energy prices, which we know are causing problems for business in Birmingham.
"Unemployment is a concern. The percentage of those claiming benefit in Birmingham rose again in March and now stands at 9.1 per cent. UK retail sales also appear to be variable.
"However, with inflation currently on target and with economic growth only just returning to trend, we see no need for a change this month.
"While a cut runs the risk of incurring a rise in inflation, we fear that a rise would undoubtedly damage consumer demand, hit UK exports and potentially reverse the mini-recovery we have seen in the economy."
Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, said hopes of a cut had receded as indicators suggested the economy was largely back on target.
She said: "There is no question that early in the year a cut looked on the cards and the Shadow Monetary Policy Committee was pushing very hard for that to happen.
"But since then those calls have receded and the SMPC voted 7-2 to hold rates at 4.5 per cent.
"The SMPC tends to be slightly more hawkish than the real thing and while there may well be need for a rise later in the year I think it is 99 per cent certain to stay at its current rate.
"Many of our members, particularly in the manufacturing sector, are competing in very testing conditions with material prices still rising and a cut would be very welcome for them."
Peter Mathews, president of Midlands World Trade Forum, said: "The UK economy has to adapt to the European economy.
"What we have at the moment is higher interest rates and a stronger currency than European countries, leading to cheaper imports.
"When 60 per cent of our exports go to Europe, 90 per cent of which are to the euro zone, UK plc has an uphill struggle to compete. We need lower interest rates."
Harvey Williams, RICS spokesman, said: "In the West
Midlands, any cause for optimism is overshadowed by the devastating decision to cease production at the Peugeot plant near Coventry.
"These are still tough times for manufacturers and indeed the business community as a whole. While we don't anticipate a cut in the base rate this month, we still hope for a reduction in the not too distant future to help businesses in the region retain their competitive edge. With a surprise dip in inflation in March, perhaps the cut will come sooner rather than later."
However a growing minority of analysts are forecasting that the next move will be higher.
"The balance of opinion on the MPC must surely be moving towards favouring the next move being up, not down," said Alan Clarke, UK economist at BNP Paribas in London. ..SUPL: