BUSINESS leaders in the West Midlands are breathing a sigh of relief at the Bank of England's decision to hold interest rates at 4 per cent.

The Bank's monetary policy committee (MPC) announced its "no change" decision on Thursday following its monthly meeting.

John Hart, president of Birmingham Chamber of Commerce and Industry, said the standstill would be good for manufacturing.

The sector, which includes food and drink production, employs 45,450 people in Worcestershire, according to the county council.

"There has been much talk of rates bottoming out and, in fact, rising again towards the 5 per cent mark. For the sake of the manufacturing industry alone, we are glad of a period of low-level rate stability," he said.

Mr Hart said the chamber's latest quarterly economic survey showed that manufacturing in the region had fought a "resilient battle" against its own recession.

"If interest rates can be kept at this level for a little longer, despite the pressures from the consumer boom and rising house prices, it would go a long way to helping the sector build a more concrete platform," he said.

Isabella Moore, chairman of the West Midlands Regional Group of Chambers, which includes the Chamber of Commerce Herefordshire and Worcestershire, said the MPC's decision was not surprising.

"Given the parlous state of the manufacturing sector and stagnant economic growth in the European Union and the United States, it is not surprising the Bank of England has decided to keep rates as they are - and that's very welcome," she said.

"We would have preferred a further cut to give a boost to manufacturing."

Carolyn Hannah, regional director of the Confederation of British Industry in the West Midlands, also said she was not surprised at the decision.

"Retail spending over the Christmas period was what consumers had been encouraged to do to maintain buoyancy in the overall economy and at present we see little risk to inflation," she said.