Bank of England policymakers are to gather for their first meeting of the new year this week amid mounting expectations that governor Mark Carney will change the threshold for considering interest rate rises within months. Thursday's decision is likely to keep rates on hold but it comes as economists predict the Bank will soon lower the unemployment target under its forward guidance policy owing to the strength of the economic recovery. The Bank has pledged not to look at raising rates from 0.5% until the unemployment rate falls to 7%. Unemployment has fallen sharply - down to 7.4% in October meaning the threshold could be reached far sooner, than anticipated. While the Bank is not expected to make any changes to its policy at this week's meeting, it could reduce the unemployment target to 6.5% as soon as next month, according to experts. Alan Clarke of Scotiabank said: "We think that 7% will be hit in the early months of 2014. As a result, the Bank is likely to modify its forward guidance policy - lowering the threshold to 6.5% - most likely at the February inflation report." Brian Hilliard at Societe Generale said the threshold could easily be reduced below 6.5%. Despite the Bank's assurances that rates will stay low for some time, the recent pace of recovery has led to fears that borrowing costs will have to rise soon.
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