BUSINESS leaders in the region welcomed the news yesterday that the Bank of England had begun considering the case for a cut in the cost of borrowing.

Minutes from this month's meeting of the bank's monetary policy committee (MPC) showed that some members felt the next move on interest rates may be to lower them.

In their view, the MPC had more room to manoeuvre because the chances of inflation being below the Chancellor's two per cent target in two years had increased.

But that did not amount to a persuasive case for a rate cut and the MPC unanimously agreed to keep rates unchanged at 4.75 per cent for the fourth month in succession.

However, George Cowcher, chief executive of the North East Chamber of Commerce (NECC), said: "Ultimately, business is looking for stability, but a reduction in rates is far more welcome than an increase. A decrease would stimulate more business activity, which would be an excellent start for the new year.

"We were concerned that the staccato rate rises of this year were triggered by an overheating housing market in the South-East, rather than over-excitement in the wider economy. Suggestions that the economy may undershoot Gordon Brown's key inflation target would lend credence to that concern."

Yesterday's report showed that MPC members felt the chances of a global economic slowdown had risen since last month, even though oil prices had fallen back from record highs.