Editorial: ​Ultra low interest rates have been damaging for Northern Ireland as for the rest of UK

UK interest rates were held for the second month in a row by the Bank of England. ​The central bank’s monetary policy committee again froze rates at 5.25% yesterday. The governor, Andrew Bailey, said it's "much too early to be thinking about rate cuts".

This is painful for some borrowers, including many homeowners, but does not have the impact it once would have had, given that most mortgages are fixed for a period of several years.

The higher rates have been necessary for several reasons. The most cited one is inflation, which has been alarmingly high in the last couple of years and has triggered a wage growth spiral, which in turn could perpetuate price rises.

But there is a less cited reason why ultra low interest rates are bad.

They have badly distorted the economy, pushing up asset prices, which benefits the affluent classes greatly and the poorer classes not at all. This is obvious in the cost of houses, which for most people are their prime asset. Overly high house prices shut the younger generations out of the housing market, and so can lead to resentment and radical economic attempts to re-balance economic inequality through soaring taxes or penalties on ownership.

If anywhere should be aware of the damage caused to society by excessive house prices it is Northern Ireland, which experienced one of the biggest house price boom and busts in recorded economic history.

A News Letter survey of housing surveys found that the average home plummeted 58% from its peak in 2007 to its trough around 2012.

Meanwhile, 15 years of rock bottom interest rates have penalised savers, who have seen their lump sums fall far behind inflation.

It is deeply wrong for a society to penalise for so long those hard-working folk who have carefully put money aside in order to compensate those who have borrowed more than they can afford.