A DECISION not to raise interest rates again has been welcomed by businesses in Herefordshire and Worcestershire.

A sigh of relief was heard yesterday after the Monetary Policy Committee (MPC) of the Bank of England declared it was leaving rates at 4.75 per cent.

The recent rises, according to the Chamber of Commerce in the two counties, were enough to cool the growth in the economy and no more were needed.

"The MPC has achieved its aim of steadying the economy," said Christopher Harvey, head of policy and representation for the Chamber.

"Any further rise, when coupled with high and unstable oil prices, would have had the effect of damaging the recovery we have seen in the manufacturing sector.

"We must closely watch the progress of the economy, especially in relation to the rest of the world, before making any judgements on when interest rates should be changed up or down."

However, indications across the rest of the country are that the MPC has already gone too far.

Some chambers wanted the committee to cut interest rates amid concerns the economy has cooled too much.

"UK businesses are facing serious pressures," said David Frost, director general of the British Chambers of Commerce. "The BCC's recent Quarterly Economic Survey for the third quarter of 2004 highlighted a worrying fall in business confidence.

"Overall, results were also disappointing for both services and manufacturing. Official figures show that quarterly growth fell sharply, with manufacturing output recording an outright fall.

"At 1.1 per cent, annual inflation is well under its target of two per cent. Meanwhile the housing market has slowed.

"The bank must continue to take a cautious approach in the months ahead."

n Have you got a business story? Contact Suzanne Black on 01905 742263, or email: sb@thisisworcester.co.uk