The no change in interest rates was widely expected by Birmingham business lead-ers, but that didn't stop them reacting with caution.

James Cooper, policy adviser at Birmingham Chamber of Commerce and Industry, said there was a "tentative" acceptance of the Bank of England decision.

"The Monetary Policy Committee has an important balancing act to perform," said Mr Cooper.

"Inflation, which is the Bank's main concern, is currently on target at two per cent, although it rose between February and January. Our recent Quarterly Economic Survey showed a record number of businesses in Birmingham were warning prices would increase in the next three months due to the rising costs of energy.

"If this translated into the wider UK economy, it would mean an increase in inflationary pressures. A cut in interest rates now could run the risk of adding to these."

David Stevens, president of Solihull Chamber, added: "The economy has shown signs of recovery, which reduces the need for a cut.

"However, that growth is still relatively small and manufacturing output fell slightly between January and February. The number of jobless is also rising across the UK economy - in Birmingham it is at the highest level since 2000.

"While we broadly support the Bank's decision this time round, we ask them to continue to be vigilant and ensure a low inflation, steady growth economy, which is what Birmingham and Solihull businesses needs."

Black Country businessman Peter Mathews, president of the Midlands World Trade Forum, said: "Interest rates are still nearly twice as high as those in Europe, which continues to harm trade with our nearest international partners on the continent as the pound is too strong against the euro.

However, with the US Federal Reserve continuing to raise its interest rates, coupled with the fact that the Chinese currency is linked to the dollar, it means British exports are in a good position in two of the most important markets in the world.

"Of course, what we'd like to see is a level playing field all around the world but we must rely on the Bank to do that by cutting our rates sooner rather than later. We need them to take due consideration of the eurozone interest rate, after all Europe is the UK's biggest overseas market, accounting for over two thirds of our exports."

Louise Bennett, chief executive of Coventry and Warwickshire Chamber of Commerce, feels hope of a cut are slipping away.

"I believe we were not far away from a cut a couple of months ago but that has quite clearly receded and, while we would welcome a reduction, we are not holding our breath."

David Waller, Midlands chairman of accountants PricewaterhouseCoopers, said: "While it may seem sensible for the MPC to adopt a wait and see approach for the time being, the decision to keep rates on hold will be a further blow for many regional businesses."

Roger Bootle, economic a dviser to accountants Deloitte, said he still believed policy would be loosened.

He said: "The inactivity of the MPC in recent months reflects its continuing concerns that last year's rise in inflation may feed through into wages growth and lower interest rates may provide greater impetus to the recent resurgence in the housing market.

"The MPC will soon be able to conclude that the prospect of second-round inflation effects is no longer an obstacle."

Simon Murphy, of lobby group Birmingham Forward, said: "We are disappointed that the rates have been held once again and feel we are long overdue for a cut that will kick start the economy. The MPC needs to take a fresh look at the situation."

But Steven McLaughlin, chairman of RICS West Midlands, said: "There simply isn't the economic evidence to support a cut at this point."