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"That's when I think we could see the dollar go into a sharp decline, inflation spike up and the Fed maybe has no choice but to become more aggressive," he said.
King insisted the inflation spike was due to short-term effects such as rising oil prices and the end of the 2.5% VAT cut, which would fade later in 2010 as the downward pressure from weak demand takes over.
Analysts blame the inflation spike on the dual pressures of consumer demand that is outstripping food supplies and a bank lending boom they say Beijing allowed to run too long after it helped China ward off the 2008 global crisis.
Therefore the question mark is how high will UK inflation spike.
But the clear and present danger from this inflation spike is for consumers.
"It looks like April's inflation spike was a one-off phenomenon.
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Inflation spiked.
If inflation spikes, energy has proved to be a good place to hide.
Too weak, and imported inflation spikes and domestic buying power fades.
"Underlying inflationary pressures are limited in the U.S. and no risks of inflation spikes at the final stages of the price formation chain are expected anytime soon," said Annalisa Piazza, an economist at Newedge Strategy.
What he doesn't note is that there were several points in the Bush years when annual inflation ran relatively high: Those inflation spikes were, of course, blips mainly driven by the price of gasoline — as was the recent acceleration of inflation.
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