Business leaders in the Midlands expect to see the Bank of England keep interest rates at their current level when the Bank's monetary policy committee begins its ruminations tomorrow.

Birmingham Chamber of Commerce urged the MPC to hold interest rates at 5.75 per cent while firms come to terms with the turmoil in the economy.

With the credit squeeze beginning to hit businesses, oil prices moving towards $100 a barrel and a strong pound, the chamber said it wanted a period of stability to allow businesses to recover.

Policy adviser Katie Teasdale said: "While the long-term consequences of global market turmoil for the city's economy remain unclear, there are serious concerns that maintaining high interest rates until the New Year will lead to a damaging economic slowdown in 2008.

"Sustained high interest rates will mean consumers are likely to spend less and exports are likely to fall, resulting in a reduction in firms' margins. This could have a very negative impact on the competitiveness of UK plc."

Ms Teasdale said exports were already suffering, with companies selling into the US being particularly affected by the exchange rate hitting $2 to the pound.

"We do not expect a cut this week, but it is vital that the MPC listens to business needs and reduces interest rates before the end of the year."

Chris Clifford, West Midlands regional director of the CBI, said the MPC should maintain rates at 5.75 per cent.

He said: "I think the MPC is not going to move the interest rates, and we would like them not to move the interest rates.

"There have been five interest rates in the last few months, and they are doing their work.

"All the financial turmoil in the sub-prime market and the interest rates has had a limited impact on the non financial sector of the economy, but it is a very fragile situation."

Mr Clifford said the CBI forecast a cut in base rates in the first quarter of 2008.

"A cut now could lead to more inflationary pressure or be a knee-jerk reaction to the current situation.

"We do not want any movements that will upset this equilibrium. We don't want a cut now and a rise later."

Ian Smith, chief executive of EEF West Midlands, said: "While an interest rate cut should now be on the Bank's radar, it is sensible to wait for more evidence on the likely slowdown in economic growth.

"However, manufacturers in the region believe the MPC should cut rates if the world economy or confidence deteriorates significantly."

The caution in the Midlands was echoed in a poll, which showed only two of the 41 economists think the MPC will cut its benchmark rate by a quarter point to 5.5 per cent.

The majority think that there's been too little, if any, evidence that that the turmoil in the financial markets in recent months, which culminated in the run on the Northern Rock bank, has had any impact on the economy.

"We had previously expected a cut at November's meeting on concerns over the likely effects of the credit squeeze," said Philip Shaw, chief UK economist at Investec Securities.

"However, over the past few weeks, the UK economy has exhibited signs of greater momentum - retail sales growth has been very robust, the latest Nationwide house price figures perhaps point to some resilience in the housing market and GDP growth, for now at least, remains above trend.

Analysts also noted that the key swing voters on the nine-member panel, Kate Barker and Charlie Bean, gave little indication that they are inclined to lower borrowing costs now.

Even if the Bank does not deliver a surprise cut, most economists are predicting a fall in February, when there should be more evidence of an economic slowdown.

Amit Kara, economist at UBS, said: "We believe that will happen over the next couple of months but not in time for next week's MPC meeting."