Business leaders in the West Midlands are calling on the Bank of England’s monetary policy committee to keep interest rates on hold this week.
The MPC is due to make its monthly announcement on rates on Thursday, but Birmingham Chamber of Commerce and Industry is urging: “Don’t touch”.
The chamber takes the view that, although there is evidence of a continuing UK slowdown alongside that of a reduction in global growth, inflation is still above target and is likely to remain so for some time.
Jerry Blackett, chief executive of the chamber, said: “We are aware that a cut in interest rates would help specific hard-hit sectors such as construction, retail and property, but a reduction at this time will fuel inflation overall.
“Unsurprisingly, confidence is low in nearly every sector but a knee-jerk cut in rates is not the answer and putting them up to control inflation would have an even more damaging effect.
“While inflation must be reined in, we need to find ways of encouraging economic activity and investment, as well as boosting business confidence”.
Sue Yates, president of Solihull Chamber of Commerce, said: “What seems to have caught us all by surprise is not that the credit crunch happened, but that the aftershock has gone on for so long and the extent to which it has affected the economy.
“The Bank must hold rates to try to slow down the impact the banking crisis is having on the majority of sectors.”