Andrew Lilico, chief economist at the influential Policy Exchange think tank, has warned of an interest rate environment not seen since the 1990s.
He said the rise could happen as the recovery beds in and Government measures to stave off a recession lead to an explosion in the money supply.
Mr Lilico also warned of a return to "boom and bust", as ballooning inflation threatens to tip the economy back in to recession in 2013 or 2014.
"Given the constraints of late 2008 and the absurdities of subsequent fiscal, finance and regulatory policy, if we can get away with a recession of only 6.6pc, deflation of only 2pc and inflation of only 10pc for one year, [Bank of England Governor] Mervyn King will deserve a medal," Mr Lilico said.
A brief double dip recession early next year is likely, he said, but it "would be quite compatible with a boom thereafter".
That boom would quickly run out of control, as the £200bn of "money printing" by the Bank during the crisis would lead to "a huge expansion in the money supply, which will lead to inflation".
He estimates that the Retail Prices Index (RPI), the inflation measure favoured in wage settlements and against which annual rises in train fares are priced, would rise "above 10pc".
The Consumer Prices Index (CPI), the inflation measure that the Bank is responsible for keeping at around 2pc, will top 6pc, Mr Lilico reckons.
"I believe that this will be the combined result of natural recovery-driven growth and massive and unsustainable investment driven by huge monetary growth," he said. Read more