Britain’s economic recovery is gaining momentum but Bank of England policy-makers held different views about the amount of slack in the economy and the medium-term inflation outlook, minutes from their April 9 meeting showed.

The bank reckons the economy grew by one per cent in the first three months of this year from the fourth quarter of 2013, up slightly from a previous growth forecast of 0.9 per cent, the minutes showed.

Economists at the bank expected a slight slowdown in the April-June period.

Members of the Monetary Policy Committee also thought it was “possible” that a sustainable rise in real wages, consistent with a durable recovery, was on the way.

But the minutes again showed that the MPC were unsure on how much scope Britain’s economy had to grow without generating inflation.

“There was considerable uncertainty about the amount of slack remaining within the economy and committee members had a range of opinions on this and the outlook for inflation in the medium-term,” the minutes showed.

British inflation dropped to 1.6 per cent in March from February’s 1.7 per cent – the lowest level since October 2009.

Economists expect a slight slowdown in the April-June period

Before December last year, annual inflation exceeded the central bank’s target every month since December 2009, eroding the spending power of households.

But inflation has been falling sharply across Europe in recent months, with eurozone inflation also hitting its lowest in more than four years in March, at 0.5 per cent. Bank policymakers also cast doubt on whether the headline unemployment rate was understating the amount of slack in the labour market because many of the jobs added by the economy were self-employed.

Britain’s unemployment rate unexpectedly dropped in the three months to February below the 7 per cent level originally set by the bank for considering an increase in interest rates, and wages caught up with inflation for the first time in nearly four years.

Britain’s labour market rebounded strongly in 2013, wrong-footing the bank. It had said last August it would start thinking about raising record-low interest rates when unemployment fell to seven per cent.

Britain’s economy is growing strongly, and in February the Bank upgraded its growth forecast for 2014 to show expansion of 3.4 per cent, which would be the country’s fastest growth since 2007. Last year the economy grew by 1.7 per cent.