Carney has said the 7% mark represents the point at which the BoE will “reassess” its interest rate policy. The unemployment rate currently stands at 7.8%.

But what does this all mean for savers and what should they do?

Shawbrook Bank’s director of savings, James Blower, gave us his thoughts:

“Before yesterday’s announcement, the expectation in the markets was that the base rate would not rise from 0.5% until late 2014 to early 2015.

“Following Mark Carney’s announcement, the expectation is that this could now happen in 2016 or even 2017. Does this mean that there will be no increase in savings rates until 2016 or 2017 or worse, a reduction in rates – particularly longer term savings rates? In short, I don’t think so, for a number of reasons.

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“Firstly, the base rate has been at 0.5% for four and a half years, yet we have seen unprecedented changes in interest rates with the best available one- year rate falling from over 6% to 2% in that period of time, so savings rates have not tracked base rate.

“Secondly, many of the largest banks are not lending anywhere near the amounts of money they were, as they seek to improve their balance sheets following the financial crisis. Therefore they do not need to ‘buy’ money from savers to lend at a premium.

“Thirdly, the Government’s Funding for Lending Scheme has provided some banks with a cheaper source of cash for lending to customers than would be the case if they were to obtain that same money from savers.

“Finally, current pricing for savings deposits already reflects the expectation that base rate will remain at 0.5% for some time, so yesterday’s advice simply prolongs the period banks expect the base rate to be flat rather than changing the opinion on the rate.

“So, what do I expect to see for savers? I think we have reached the floor in the market for most savings rates and that the levels won’t change significantly. For example, I don’t expect the best one-year rates to fall below 2%. However, whereas before I felt that it would be early 2014 before we might see a material increase in savings rates, I think this may now be further into 2014.

“So what should savers do now? Shorter term savers (looking for up to 12 months) should consider notice accounts which are paying similar rates to one-year fixed rates. You should check the small print but most require the Bank to give an equal period of notice if the rate changes e.g. if it is a 95 day notice account, the Bank should give 95 days notice before it changes the rate. This provides protection around the rate and plenty of notice to consider switching.

“For longer term savers it is tricky as none of us can honestly say what will happen in the next 3 – 5 years. Many have been advising savers not to lock away funds for the long term for the past 18 months and yet in that period the best 5 year rate has fallen from over 4% to below 3%.

“While many still continue to offer that advice, Shawbrook customers do not agree as our 5-year fixed rate bond was our most popular product in July and leads the way this month. If you need certainty of rate then do not assume that 3 and 5 year rates won’t go any lower – those that have avoided locking away over the long term these past 18 months have missed out on some great rates as a consequence.”