Black Country business leaders have warned the Bank of England that any move this week to raise interest rates would be disastrous.
Policymakers are set to "wait and see" over interest rates this week after recent financial turmoil in stock markets and easing inflation pressures.
Experts predict rate-setters on the Bank of England's Monetary Policy Committee (MPC) will opt to hold borrowing costs at 5.75 per cent for the second successive month on Thursday as fears over a global credit crunch send shockwaves through world markets.
The bank - which is charged with keeping Consumer Prices Index (CPI) inflation at 2 per cent - has also seen the yardstick fall below target for the first time in more than a year as lower food and furniture prices eased back CPI to 1.9 per cent in July.
But keeping rates static may not be enough, warned Peter Mathews, president of Black Country Chamber of Commerce.
He said: "The recent crisis in world stock markets and the fact that inflation and earnings growth are slowing means the Bank is most likely to leave rates at 5.75 per cent.
"However, the Bank should not merely adopt a do-nothing stance. The fact remains that interest rates are too high to enable British companies to compete in the global economy and that is where our future prosperity lies.
"Every time interest rates go up and stay up, British exports become too expensive and imports get even cheaper. That is a disastrous mix for hard-pressed Black Country companies."
He said that recent comments from former MPC member Stephen Nickell that the Bank was "institutionally too hawkish" were worrying.
"We need to see the MPC prove that it is aware of the damaging impact interest rate rises are having on the real economy.
"We need rates to come down, not go up further."
Howard Archer, chief UK economist with Global Insight, said the Bank was "firmly in 'wait and see' mode".
He added: "Events since the August meeting seem most unlikely to have pushed the MPC any nearer to raising interest rates again. Indeed if anything, they have diluted the case for an interest rate hike, at least in the near term.
"Global credit and financial market problems and uncertainties have deepened over the past month, while UK consumer price inflation unexpectedly dipped sharply."
Minutes of the MPC's last meeting - which revealed a unanimous call to hold rates after five hikes in a year - also fuelled hopes that borrowing costs have peaked at 5.75 per cent after committee members said they "had no firm view" whether interest rates would need to rise again.
The Bank's latest quarterly inflation report, published last month, hinted that borrowing costs may have to be raised to 6 per cent to keep CPI on target in the medium term.
But other economists said spill-over effects from sustained turbulence in financial markets - more cautious lending from banks, job losses in the City, and a loss of confidence hitting the wider UK economy - could make a "material difference" to rate prospects.
Investec economist Philip Shaw said: "Our assessment of the fundamentals has been for some time that rates have peaked, a conclusion which the recent bout of financial sector turmoil has reinforced."
But despite tentative signs that rate rises are slowing down the economy, the housing market has remained relatively robust as Bank of England figures showed the number of new mortgages approved remained strong during July. A total of 288,000 new home loans were approved during the month, down only slightly on the previous month's figure of 289,000, according to the Bank's data.