BRITISH Chambers of Commerce has pleaded with the Bank of England "not to jump the gun" by raising benchmark UK interest rates sooner than had been expected.

Its appeal came yesterday, hard on the heels of a speech from Mark Carney at the Mansion House in London on Thursday night, in which the Bank of England governor said: "There's already great speculation about the exact timing of the first rate hike and this decision is becoming more balanced.

"It could happen sooner than markets currently expect...The MPC has rightly stressed that the timing of the first Bank Rate increase is less important than the path thereafter."

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Sterling surged yesterday in the wake of Mr Carney's comments, as financial market players brought forward their forecasts of when base rates might start to rise from their record low of 0.5 per cent, where they have been since March 2009.

The pound was trading at $1.6953 at 5pm, up more than one cent on its $1.6852 close on Thursday. Sterling also rose sharply against the euro. The single currency was trading at 79.76p at 5pm, down 0.67p from its previous close in London.

Mr Carney warned in his speech that the UK housing market "is showing the potential to overheat".

Adam Marshall, executive director of policy and external affairs at British Chambers of Commerce (BCC), said: "While Mark Carney is right to say that the timing of Britain's first interest rate rise is less important than the path thereafter, we would urge the Monetary Policy Committee not to jump the gun.

"Earlier-than-expected rate rises could mean that current levels of growth are as good as it gets for the UK economy. The case for acting more swiftly has not yet been made. If the housing market is the principal concern, there are other tools at the Bank of England's disposal to cool the market."

He added: "If we are to see continued business investment growth, following the abysmal levels seen over far too many years, companies need to be confident that they will be working in a low interest-rate environment, facing only gradual rather than sudden change."

Mr Carney did emphasise the MPC expected rate rises to be "gradual and limited".

Consultancy Capital Economics said: "Mark Carney's statement … that the first rise in interest rates … could happen sooner than markets currently expect looked like a pretty plain signal that tighter monetary policy is not very far away. Even so, while the first rise in interest rates now looks most likely to come in the first quarter of 2015, we still think rates will rise at a historically slow pace."

Howard Archer, chief UK economist at consultancy IHS Global Insight, said: "We recently brought forward our expectation of the first interest-rate hike, from 0.5 per cent to 0.75 per cent, to February 2015 from June 2015. Furthermore, it is now looking very possible that the Bank could act before the end of 2014, although at this stage we lean towards the view that a majority of MPC members will prefer to wait until early 2015 so as to give the economy every chance to establish extended and increasingly broad-based growth."

A rate rise during the first quarter of 2015, or before, would come ahead of next May's General Election.

BCC chief economist David Kern said: "The European Central Bank's recent move to a negative deposit rate has reinforced the upward pressure on sterling, which is making our exports more expensive. Mr Carney's comments...may add to these unwelcome trends. UK inflation is still below target, and earnings growth is below inflation. Global growth forecasts have been revised down recently, and the UK recovery is still facing obstacles. It is therefore premature to consider early interest rate increases."