King said further house price falls were also likely, adding to sharply rising concerns over the housing market in the last few weeks. Prices have started falling as mortgage lenders hit by the credit squeeze have made it harder for people to take out new home loans.
Another Reuters poll on Wednesday showed analysts expect a 5 percent house price fall this year and another 5 percent in 2009, but many commentators are even more pessimistic.
Bank policymaker David Blanchflower has said he would not be surprised by a decline of more than 30 percent.
That could be political dynamite in a country where two thirds own their homes. The government has been lobbying mortgage lenders to pass on the Bank's three official rate cuts to their customers in an attempt to revive the market.
But interest rate cuts may be a long way off. "The probability of a June cut has been on life support since the CPI data yesterday and the inflation report has now switched the machine off," said Alan Clarke, economist at BNP Paribas.
The Bank report shows inflation could hit 3.7 percent this year and still be clearly above its 2 percent target if interest rates come down by half a percentage point over the next year, as many analysts had previously expected.
King said he expected to have to write to the government several times on how he plans to bring prices back under control -- as required by the central bank's remit if inflation deviates from target by more than a percentage point.
April's figures already showed the CPI rate almost there, at 3.0 percent.
Economic growth was expected to slow to around 1 percent at the end of this year before picking up to around 2.3 percent in two years - still below the long-term trend rate.
"It is quite possible that at some point we may get an odd quarter or two of negative growth, but recession is not the central projection at all," said King.
