Birmingham Chamber of Commerce and Industry welcomed news of the Bank of England interest rate cut.

It said the quarter point reduction - to 5.5 per cent - should help boost consumer confidence in the run-up to Christmas and give the economy a kick-start in the New Year.

Katie Teasdale, BCI policy adviser, said: "We commend the Monetary Policy Committee for listening to Birmingham businesses' calls for a fall in interest rates during the busy and hugely important Christmas period.

"This will act to increase business and consumer confidence at a delicate time. Uncertainties around the US market, combined with the credit crunch and the weakening UK housing market, as well as business concerns regarding slowing orders, suggest a quarter point cut in rates is needed to steady the ship."

Peter Mathews, president of both the Midlands World Trade Forum and Black Country Chamber of Commerce, said: "The person in the street can see how the weak dollar - the world's common currency - is affecting them every time they go to the petrol pump. Coupled with high interest rates and the strong pound, exporters are having a torrid time."

Business would have preferred to have seen more than a quarter point cut, he suggested.

"We wanted decisive action from the Bank to support British business and British jobs. Instead, the Monetary Policy Committee is tinkering at the margins. It seems likely that there will be another small cut early in the New Year. What we needed was a bold move now that would encourage investment and help our businesses."

Sue Yates, president of Solihull Chamber, added: "Consumer confidence is low and shops were expecting a slow festive period but hopefully the situation will now improve."

David Burton, chairman of the Confederation of West Midlands Chambers of Commerce, said: "Companies of all sectors have been waiting for this decision for a long time and we hope it is the beginning of the end for this period of high interest rates."

CBI West Midlands regional director Chris Clifford said: "It was a close call, with the Bank having to worry about inflationary pressures into 2008, whilst needing to ensure orderly credit markets and support business and consumer sentiment. Hopefully the decision will help stabilise the money markets and minimise any future impact on other sectors."

Gary Cowdrill, of business lobby group Birmingham Forward, said: "This should only be the start - further action will be needed next month if the economy is to stay on an even keel.

"We recognise that the Bank of England has to balance the risks of managing an economic downturn against inflationary pressure. However the slowdown that is undoubtedly taking place is more worrying.

"Figures released this week show that consumer confidence is at its lowest level during any time this year. Robust management is now required and although this announcement is a good pre-emptive strike it will not be sufficient in isolation."

David Waller, Midlands chairman of accountants PricewaterhouseCoopers, said: "The MPC appears at last to have recognised that there are fundamental

challenges developing within the core of our economy. This small rate cut will go some way towards helping people develop a sense that stability in commerce and retail could return in the New Year.

"A half per cent or more cut would have been a bolder move, and would have signalled that those overseeing the management of our economy are prepared to take the steps necessary to re-establish confidence and to counteract the liquidity and credit difficulties that have arisen as a result of lending decisions in other parts of the world.

"It is to be hoped that there is no more major bad news which is yet to emerge from the global financial sector."

Louise Bennett, chief executive of Coventry and Warwickshire Chamber, said she expected the cut to be "the first but maybe not the last".

She noted: "There is no question that the Monetary Policy Committee must have felt that the downturn in the economy was not slowing as predicted and felt that it had to act.

"Even a week ago, the evidence of that was not so clear cut but a whole stream of statistics in recent days has pointed to the fact things had not levelled out."