Business leaders have broadly welcomed the Bank of England's decision to peg interest rates at 4.75 per cent for the fourth month running.

The latest no-change decision from the Bank's monetary policy committee (MPC) was seen as a timely boost for independent traders and homeowners.

Tony Mernagh, executive director of the Brighton and Hove Economic Partnership, said a rise in interest rates would have been disastrous for the city's shopkeepers.

He said: "Retail is definitely going through a downturn at the moment, even among the big boys, partly because a fall in house prices has made people feel less wealthy. Successive interest rate increases also mean people are spending a lot more of their disposable income on servicing their debts.

"Another rise in rates by the Bank of England would have been the straw that broke the consumer's back and bad news for retailers."

Patrick Lee, a partner at accountants Ashdown Hurrey Group in Hastings, said: "The decision to leave base rates unchanged comes as no surprise. The key debate concerns the next 12 months as the MPC assesses the real extent of the housing market slowdown.

"I don't anticipate any changes in the first few months of 2005."

Earlier this week, factory output for October showed a 0.1 per cent fall, confounding economists who had predicted a 0.3 per cent rise.

Inflation is still well below the Government's target of two per cent in two years, having risen by 0.1 per cent to 1.2 per cent last month.

Weak economic growth is also likely to have influenced the decision.

Last month the Office for National Statistics stuck by its gloomy estimate of 0.4 per cent growth in gross domestic product in the quarter to the end of September.

Steven Gauge, a director at business support group Sussex Enterprise, had qualified praise for the bank's decision to hold interest rates.

He said: "There is a degree of uncertainty across sectors and it is right to exercise caution at present and nurture the economic recovery.

"In our view, interest rates are still too high, especially from the point of view of manufacturing companies which are now suffering from sterling's rise against the dollar. The housing market has showed signs of stabilising and the Government must now realise the way to guarantee continued stability is to build affordable housing for first time buyers.

"It is possible we will see further rises in 2005 and we believe these would be premature and potentially harmful for Sussex businesses."