"The nice decade is behind us," King said.

In a quarterly report on inflation Wednesday, King said Britain would face rising food and energy costs, an economic slowdown amounting to 1 percent growth for 2008 and decreases in pay raises, The Daily Mail reported.

King also said the housing market would deteriorate "markedly."

He also said the BOE should not take a heavy hand in helping the economy as it adjusts to new realities.

"We are traveling along a bumpy road as the economy re-balances. Monetary policy shouldn't try to prevent that adjustment," King said.

"The message would seem to be that the Bank's rate-setting committee expects to cut rates only once more at the most," economic analyst Jonathan Loynes of Capital Economics said in response to King's statements.