David Blanchflower, the arch-dove on the Bank of England’s rate-setting committee, will step down, the Chancellor said yesterday.

Professor Blanchflower, who has voted to cut interest rates every month since October last year, said that he would not seek reappointment when his three-year term ends on May 31.

His doveish voting record often put him at loggerheads with members of the committee, who refused to cut rates earlier over fears about rising inflation. Professor Blanchflower, who travelled to rate meetings from his home in the United States, maintained that the sharp economic downturn in America could be replicated here and advocated taking evasive action by cutting rates.

In a further shake-up of the Monetary Policy Committee, Alistair Darling yesterday said that Paul Tucker, head of markets at the Bank, would replace Sir John Gieve as deputy governor for financial stability. Sir John is stepping down in March.

Mr Tucker joined the Bank in 1980 and has been on the rate-setting committee since 2002. Sir John Gieve was Permanent Secretary of the Home Office before he joined the Bank.

This is the third shuffle in less than six months, after Charles Bean was appointed deputy governor for monetary policy in July to replace Rachel Lomax, who retired.

Professor Blanchflower’s departure was announced a week after the Bank made its third aggressive rate cut in the face of the sharp downturn in the economy. The Bank has cut rates from 5 per cent to 2 per cent since October. Some analysts forecast that interest rates will drop to 0 per cent next year.

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