Deutsche Bank Research (DB  ) warned that the United States may be headed towards one of its worst inflationary periods in history in a report on Monday, arguing that the combined loose central bank monetary policy and increase government spending could create an inflation crisis within the next few years.

In their forecast, Chief Economist David Folkerts-Landau along with Peter Hooper, global head of economic research, Jim Reid, head of thematic research, and Luke Templeman, CPA research analyst, point to high levels of consumer "excess savings" mixed with governmental focus on stimulus alongside a dovish Federal Reserve when inflation does appear could "create a significant recession and set off a chain of financial distress around the world, particularly in emerging markets."

The report's authors fear that the Fed's new framework that tolerates higher levels of inflation, with no intention to tighten it's policy under inflation holds over 2% for a sustained amount of time will have dire impacts on the global economy.

"The Fed's move away from preemptive action in its new policy framework is the most important factor raising the risk that it will fall well behind the curve and be too late to deal effectively with an inflation problem without a major disruption to activity," the authors wrote.

Deutsche bank's forecast stands mostly on its own, with policymakers and other Wall Street firms believing that the current rise in inflation is only temporary will ease as current supply chain disruptions and the impacts of the coronavirus pandemic-induced recession subside.

On Sunday, U.S. Treasury Secretary Janet Yellen said in an interview with Bloomberg Newsthat President Joe Biden should push to pass his two combined $4 trillion stimulus packages even if they have the potential to trigger higher inflation and interest rates into 2022.

"If we ended up with a slightly higher interest rate environment it would actually be a plus from society's point of view and the [Fed's] point of view," Yellen told Bloomberg, arguing that Biden's proposals would only add up to about $400 billion in spending per year, while would no be enough to cause long-term inflation. Moreover, any rise in prices resulting from the stimulus packages would fade into the next year, Yellen added.

The Deutsche report disagrees with this view on the current U.S. economic situation, saying that more aggressive governmental stimulus and other economic changes will lead to an inflation environment that the Fed will not be prepared to combat.

"It may take a year longer until 2023 but inflation will re-emerge. And while it is admirable that this patient is due to the fact that the Fed's priorities are shifting towards social goals, negating inflation leaves global economies sitting on a time bomb," the authors wrote. "The effects could be devastating, particularly for the most vulnerable in society."