Business leaders in the West Midlands last night criticised the Bank of England's decision to raise interest rates to 4.75 per cent, saying it would threaten the region's economic recovery.
Birmingham Chamber of Commerce warned the economic revival was "still fragile".
The rate rise came as new Government figures revealed economic output in the West Midlands was growing more slowly than in other parts of the country.
The Bank said the quarter of a percentage point increase was necessary to curb inflationary pressures.
For homeowners with an average £80,000 mortgage, the decision is likely to add around £12 a month to repayments.
James Cooper, the Chamber's policy adviser, said: "We are disappointed the Bank's Monetary Policy Committee has made the knee-jerk reaction to the current economic climate that we have consistently warned against.
"The economic revival is still fragile and we fear this decision will only make the problem worse."
Chris Clifford, West Midlands regional director of the Confederation of British Industry, said: "It is a disappointment as far as we are concerned.
"Obviously it will have some impact on our members as they struggle to compete in a globally competitive market."