The government has appointed Michele Bullock the new governor of the Reserve Bank – the first woman to occupy the post.

Bullock, currently deputy governor, replaces Philip Lowe, who has weathered strong criticism, including from within Labor, during sustained rises in interest rates.

Bullock’s appointment was announced by Prime Minister Anthony Albanese and Treasurer Jim Chalmers at a joint news conference, after cabinet ticked off on Chalmers’ recommendation.

Chalmers said:

Michele is an outstanding economist, but also an accomplished and respected leader. Her appointment best combines experience and expertise with a fresh leadership perspective at the Reserve Bank as well.

He said Bullock was “fiercely independent.”

Bullock has worked for the bank for nearly four decades.

The announcement comes after months of speculation about Lowe’s future. The shortlist included treasury secretary Steven Kennedy and finance department secretary Jenny Wilkinson.

Lowe’s term, which started in 2016, runs out in September.

He made it clear as recently as this week that he would like another term. But this never seemed likely in view of the criticisms of him and the fact the government wanted a fresh face to oversee the extensive reforms of the bank following the recent review.

These changes will see two boards replace the present one, with interest rates to be set by a more specialist board.

The main criticisms of Lowe have been his inaccurate prediction rates would not rise before 2024, and (by some) that the bank was too slow in starting to put them up.

Among the public, with people suffering acute cost of living pressures, he became the face of mortgage pain. There have been a dozen rises in something over a year.

Lowe has been adamant that rates must rise as high as necessary to deal with inflation. The Reserve Bank paused the cash rate this month, but Lowe made it clear rates could go higher if necessary.

Lowe said in a statement Chalmers had made a “first-rate appointment”.

The Reserve Bank is in very good hands as it deals with the current inflation challenge and implementing the recommendations of the Review of the RBA. I wish Michele all the best.

Bullock said she was “deeply honoured”.

Lowe will continue in his position until the end of his term on September 17. Chalmers said he would select a replacement for Bullock as deputy governor before then.

Bullock is the ninth governor of the RBA. Five of the previous governors have only served one term of seven years. The average length served as governor is less than eight years.