As Britons absorbed the jolt from the Bank of England’s latest touch on the economy’s interest-rate brakes yesterday, borrowers were like fractious children in the back seat of a car on a holiday jaunt. All they wanted to know was: “Are we nearly there yet?”

The question to which households nationwide now want the answer is, have interest rates now peaked. Is this as bad as it is going to get?

Unfortunately for hard-pressed homeowners, the swift answer yesterday from City pundits with a wary eye on the hawkish figure in the driving seat, the Bank of England’s Governor, Mervyn King, was “no”.

Having absorbed the aggressive tone of yesterday’s statement from the Bank, which sounded a warning over inflation risks that “continue to lie to the upside”, a majority of economists concluded that Britain must steel itself for interest rates to climb yet higher, to 6 per cent or more – a level not seen since 2000.

Although the Bank’s rate-setting Monetary Policy Committee is sharply divided, it does seem likely that borrowing costs will rise at least once more. It seems probable that the next few months will bring enough ammunition for the MPC’s hawks to secure a majority for another increase.

The broad backdrop remains one of economic strength, with growth rattling along at close to its long-term “trend” rate, its effective safe speed limit, in the first half of the year. In turn, this robust expansion has eaten up ever more of the spare capacity in the economy that keeps a lid on inflation. Businesses have responded by trying to push up their prices. It is this that has become the Bank’s key concern.

While headline inflation, has fallen back sharply from a 3.1 per cent peak in March to 2.5 per cent by May, many MPC members fear that if businesses can make higher prices stick it will take off again, and become entrenched. It is a good bet that the Bank will seek to take out extra insurance to ensure that these worries are not fulfilled.

The good news, however, is that if rates are not yet at their peak, there may not be too far to go. We have still to see the full impact of the four increases that the Bank imposed before yesterday’s rise, and these past moves now seem to be beginning to take a growing toll on the high street and the housing market. The latest surveys of high street activity showed sales faltering, and trading conditions at their worst for at least six months.

Oficial figures have revealed a growing squeeze on household spending power, with disposable incomes, after inflation, falling in both the final quarter of 2006 and the first quarter of this year – the first such back-to-back drop since early 1998.

This pressure on the consumer is set to be ratcheted up as the new rise in interest rates bites, and as more homeowners come off cheap fixed-rate mortgage deals and face jumps in repayments.

In the face of these pressures, households will likely scale back spending, so that weaker consumer demand will make it harder for businesses to push up prices, thus reducing inflationary pressures. This should limit the scale of any further increases in interest rates.