The Reserve Bank is facing a major overhaul with the creation of two separate boards, one responsible for governance and the other to set interest rates.

A full review, to be handed down by Treasurer Jim Chalmers on Thursday, will make 51 specific recommendations to renovate Australia’s central bank.

All of those suggestions have the government’s in-principle stamp of approval.

The treasurer is also expected to name two new board members to replace outgoing members Wendy Craik and Mark Barnaba.

The creation of a governance board will bring the RBA in line with other central banks, and it will be tasked with overseeing operations that don’t concern monetary policy.

The reviewers will also recommend the RBA remain independent and that it keeps its inflation-targeting framework intact.

“The review is all about ensuring Australia’s central bank and monetary policy arrangements are as strong and effective as they can be into the future,” Dr Chalmers said. 

Some of the changes will need to be passed by parliament, and shadow treasurer Angus Taylor has already signalled his party’s willingness to co-operate on sensible reforms.

Mr Taylor said it was enormously important for Australia to have an independent, credible and capable central bank. 

“The coalition’s input into this review has been centred on ensuring the Reserve Bank’s monetary policy approach remains laser-focused on returning inflation to the two-three per cent target and properly recognises the interaction of monetary and fiscal policy,” he said.

As well, any governance reforms should be balanced, appropriately staged, preserve the Reserve Bank’s independence and bolster its capabilities, he said.

The Albanese government began the review of the Reserve Bank last year.

By Poppy Johnston in Canberra