Interest rate rise would be 'rash, premature and foolhardy' as Bank of England heads for split

British businesses see "no convincing argument" to raise interest rates ahead of a critical meeting of the Bank of England's Monetary Policy Committee tomorrow (6 August).

The decision on whether to increase interest rates from their historic lows of 0.5% is likely to see a split among the nine members of the Committee.

However, John Longworth, director general of the British Chambers of Commerce, has hit out at any potential rise.

He said: "Some commentators are becoming louder in calling for an interest rate rise. I worry that familiarity has bred contempt when it comes to the importance of low rates in our current economic circumstances. Businesses see no convincing argument to raise interest rates at the moment. Indeed, doing so would be rash, premature and could potentially stifle growth."

Tomorrow has been dubbed "Super Thursday" by economists because the decision will be accompanied by the minutes of the meeting, rather than two weeks later. A triple whammy will be completed by the release of the bank's Quarterly Inflation Report for August.

Longworth added: "The recovery is still in early days, export growth has stalled, sterling is strong and moves that strengthen it further would hit our manufacturers, there is great global uncertainty, and, at home, the government is embarking on the next round of cuts.

"In such a delicate and uncertain situation, it would be foolhardy to throw in another unnecessary variable. At some point rates will have to rise and, when they do, it should be done slowly and steadily. But the moment to trigger the rate rise is not yet upon us."

Longworth's comments come amid increasingly hawkish tones from the Bank.

Minutes from the July MPC meeting indicated the Bank of England is now getting closer to an interest rate hike. While all nine MPC members voted for unchanged interest rates, this was significantly influenced by the crisis in Greece which was at its peak.

Chris Hare, analyst at Investec, said: "On the policy decision itself, we think there is a strong chance that one or two committee members will vote for a rate rise next week. Mood music for a rate rise has become louder in recent weeks."