Birmingham business leaders expressed relief that the Bank of England resisted the temptation to raise interest rates.

James Cooper, policy adviser at Birmingham Chamber of Commerce and Industry, said there were signs of an economic recovery and a rise would have run the risk of scuppering it.

He said: "By keeping rates on hold for an eleventh successive month the MPC has indicated it is willing to give the economy breathing space to grow. The recovery, especially within the manufacturing sector, is fragile."

David Stevens, president of Solihull Chamber, added: "We suspect rising energy costs over the past few months have driven inflation up and it would have been a mistake for the MPC to raise rates in a knee jerk reaction rather than let the dust settle and take a more considered approach.

"We hope the rates will remain level for as long as possible, but businesses should be aware a rise will probably come early in 2007, if not before."

Peter Mathews, president of the Midlands World Trade Forum, said: "The pound is still too strong because of the high rates in the UK compared to the continent and that is having an adverse affect on the price of our exports.

"Inflation, house prices and retail spending are all important issues but vibrant international trade, with the UK at its heart, is just as important but is too often neglected in the MPC considerations."

Louise Bennett, chief executive of Coventry and Warwickshire Chamber of Commerce, said holding rates at their current level "was the only sensible course of action".

She went on: "There are some positive statistics coming through for business at the moment - particularly manufacturing - which may surprise some people. But the word on the ground does not always marry with the statistics and a rate rise for those firms already struggling would be a damaging blow."

Ian McCafferty, CBI chief economic advisor, said: "With mixed economic signals, the Bank has chosen a steady course that will encourage stability. Any movement would have been premature."

Ian Smith, chief executive of EEF West Midlands, said: "With the economy showing signs of rebalancing away from the consumer and towards investment and trade, it is moving in exactly the direction the Bank would want. For the time being there is no need to risk rocking the boat with a move in either direction."

Ronnie Bowker, senior partner at Ernst & Young, noted: "Stability of interest rates is helping companies to plan, forecast and invest with relative confidence, in the knowledge that a rate increase is unlikely in the short term. This predictability is exactly what the doctor ordered, and I hope the Committee members recognise this positive effect and continue in the same vein next month.

"The stock market shock in June looks to have stabilised and is making a gradual recovery, which is helping to bolster confidence.

"Inflation continues to evade the knock-on effect of rising energy prices, and there has been little or no inflationary pressure from wage increases to give the Committee a compelling reason to push for a change.

"However, rising unemployment is still a real concern, and the manufacturing sector is still experiencing its fair share of challenges. This is despite strong domestic and export demand. My concerns lie with Birmingham's traditional manufacturing sectors which may be losing out in the race to compete with the emerging markets of the Far East and Eastern Europe.

"Although not effecting inflation directly, cost pressures from rising energy costs continue to worry the business community. I think the golden age of consistently low energy costs for both consumers and businesses is gone, and this factor will continue to cause concern for some time."