CAN you believe it is a decade since the Bank of England last raised interest rates?

In a bid to keep rising inflation under control, the Bank’s Monetary Policy Committee (MPC) upped the base rate from 5.5 per cent to 5.75 per cent in July 2007, taking it to the highest level it had been at for six and a half years.

Having brought it back to 5.5 per cent five months later, the MPC then embarked on a series of cuts that saw the rate fall to a 57-year low of two per cent in December 2008 before spending seven years languishing at 0.5 per cent and hitting an all-time low of 0.25 per cent last year.

For Charles Hepworth, investment director at asset manager GAM, this situation should never have occurred, with rate cuts generally being seen as a temporary fix for propping up a sluggish economy.

“Slashing rates aggressively into the financial crisis was intended to provide instant relief to tightening financial conditions – in effect acting as the great shock absorber to a business cycle going into a downturn,” he says.

“The ultra-loose low-rate environment should have only been a temporary phenomenon, with the consumer and business sector expected to display the typical cyclical animal spirits upswing after a few quarters.”

Yet occur it did and it is savers who have paid the price, with all UK banks and building societies using the base rate as the barometer by which to set their own savings rates.

Shakila Hashmi, head of money at price comparison site comparethemarket, says this means that the last decade has been “disastrous for savers”.

“This anniversary is a stark reminder of just how long we’ve been in this now normal low interest rate environment, which has led to the majority of savers losing money year on year,” she says.

“At present there are no savings accounts which offer interest rates above the current inflation rate of 2.9 per cent.

“Whichever way you look at it, savers’ options for favourable cash-based returns are severely limited.”

Yet it seems that a rate rise could be on the horizon, with the Bank of England’s chief economist Andy Haldane last month indicating that he no longer agrees with governor Mark Carney that they should remain on hold. At their last meeting three MPC members voted for a rise and five voted against.

Even Carney, who used his Mansion House speech to say that it is “not yet time” to begin raising rates, told a European Central Bank Forum that “some removal of monetary stimulus is likely to become necessary”.

This, says The Share Centre’s economics commentator Michael Baxter, shows that the “MPC is shifting its emphasis” and while he does not believe it will raise rates at its next meeting in August he feels that “an increase before the year is up is a distinct possibility”.

This would be a welcome development for savers, who are already starting to see providers give a little ground on their own painfully low savings rates.

Charter Savings Bank, a direct bank that launched in 2015, is the latest to announce an improvement in some of its rates, although with its two-year fixed rate ISA now paying 1.37 per cent rather than 1.2 per cent while its three-year version pays 1.45 per cent rather than 1.3 per cent the levels remain low.

The flipside, of course, is that a rate rise could prove disastrous for borrowers who have grown used to being able to access cheap debt.

According to The Money Charity, the amount of debt per UK adult increased by £929.97 between May 2016 and May 2017, with the total amount borrowed rising from £1.489 trillion to £1.537tn.

For Alec Pillmoor, a personal insolvency partner at RSM, those holding that debt are “facing a repayment time bomb as a period of interest rate rises loom large”.

Pointing out that outstanding credit card debt has grown by almost a quarter to reach £68 billion in the last decade, Pillmoor says that the nine million adults who have turned 18 in that period “have only ever experienced interest rate falls”.

“When the inevitable rate rise comes – and this could be as early as the second half of this year according to the deputy governor of the Bank of England – this new generation of borrowers could well get a nasty wake-up call,” he says.

“Those who have been tempted by attractive loan and credit card deals, car finance offers and low-rate mortgages may well find that any such rise could leave them with less cash being available to meet repayments when they fall due.”

Put like that, perhaps we should worry less about boosting our savings and more about paying down our debts before a rate rise does finally kick in.