Lomax and Lambert to join rate-setting body

The Chancellor, Gordon Brown, yesterday completed the wholesale shake-up of the Bank of England's Monetary Policy Committee with the appointment of a deputy governor and two other members.

Rachel Lomax, currently permanent secretary at the Department for Transport, will become the first female deputy governor in the 300-year history of the Bank. She will replace Mervyn King, who becomes Governor on 1 July, succeeding Sir Edward George who retires in June,

Richard Lambert, 59, a former editor of the Financial Times, replaces Christopher Allsopp while Stephen Nickell, a labour market economist, is reappointed for a second term. Only four of those on the MPC a year ago will remain.

Neither of the new members is well known for their views on interest rate policy, but analysts said that collectively they shifted the MPC more towards cutting rates and in favour of the euro.

Mr Lambert is known for his support of the euro while Mr Allsopp was believed to be broadly sceptical. Mr Nickell has voiced his support for UK membership.

Christopher Huhne, a Liberal Democrat MEP, said: "This will help in any transition to the euro."

Economists also seized on the decision by the Chancellor to commission Mr Allsopp to advise on the changes to statistics that would be needed if Britain were to join the single currency. He will not start his review until July, a month after Mr Brown must decide whether his five economic tests for UK membership of the euro have been met.

Ciaran Barr, chief UK economist at Deutsche Bank, said: "If the Chancellor delivers a straight 'no' on the five tests then Allsopp's term of reference for the report becomes something of an irrelevance. As such there will be a suspicion that the five tests could be 'yes' or 'not yet'."

In terms of monetary policy, Mr Nickell – the first non-Bank MPC member to be reappointed – has recently garnered a reputation as a "dove". He was one of the seven members to vote for a cut this month.

Mr Lambert is a member of a shadow MPC committee on which he has on occasion been in a minority in voting for a cut.

Little is known about the views of the Swansea-born Ms Lomax, 58, who was an economist at the Treasury for 26 years.

Analysts said she had been appointed for her managerial skills. Before the DoT she was the senior civil servant at the Department of Work and Pensions and the Welsh Office.

Announcing the appointment, Mr Brown said: "She has a hugely impressive track record as an economist and departmental manager at the heart of government."

Michael Hume, chief UK economist at Lehman Brothers, said: "History strongly suggests it is futile trying to predict how the new appointees, Mr Lambert or Ms Lomax, will end up voting on the committee."

Mr Lambert must give up his jobs as a director of the insurer Axa and the derivatives market Liffe. The Bank declined to say how much he would be paid.

External members currently get £137,979 if they work a five-day week. Mr King is currently paid £207,400 as deputy governor.