Fears over the revival of the UK's long-suffering manufacturing sector are set to prompt Bank of England chiefs to resist the urge to raise interest rates.

Union boss John Monks has joined the ranks of those urging members of the Bank's monetary policy committee to leave the key interest rate on hold at 4% after their latest meeting ends later on Thursday.

Mr Monks, general secretary of the TUC, urged the MPC to resist "siren calls" for a rise in rates to counter buoyancy in the UK's housing and retail sectors.

He said a rise threatened to renew a spate of job losses among UK manufacturers, which a survey on Wednesday showed suffered a fall in optimism in May.

Also on Wednesday, the Engineering Employers' Federation warned that members forecast a drop in orders and output in the second quarter of the year.

Inflation fears

The warnings are thought likely stem enthusiasm among MPC members for a rate rise to head-off inflation fears stoked by High Street and housing booms.

House prices grew last month at their fastest ever rate, mortgage lender Halifax said on Tuesday, while official figures showed that retail sales surged by 1.7% in April.

The Bank itself believes inflation will rise above the 2.5% target rate in two years' time.

And the weakening of the pound against the euro, amid a switch from the dollar and growing speculation that the UK will adopt Europe's single currency, has been seen as increasing the inflation threat.

Weaker sterling leaves importers paying more for foreign goods, raising the threat of higher prices.

Rises to come?

But analysts believe that, with the economy failing to grow over the first three months of the year, the MPC will no raise rates - for now.

"It would be a brave committee that takes the plunge and raises rates at the moment," said Philip Shaw, chief economist at Investec.

Most analysts believe that rates, currently at their lowest for about 40 years, will rise in coming months, reaching even 5% by the end of the year according to some forecasts.