Philip Lowe will replace Glenn Stevens as the next head of the Reserve Bank of Australia.
The deputy governor will step up to the top job when his boss's 10-year term ends on September 17.
"He brings a wealth of knowledge and experience to the role of governor," Treasurer Scott Morrison told parliament on Thursday.
"The governor of the Reserve Bank tells me he is the most qualified person in his opinion to have ever been appointed to the role."
Dr Lowe joined the RBA in 1980, heading up several departments and has served as deputy governor since 2012.
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He has been appointed for a seven-year term.
Mr Morrison said the role of deputy governor would be filled in the second half of the year.
Renowned economist Ian Harper, who recently chaired the federal government's competition policy review, has been appointed as a part-time member of the RBA board for a five-year term, replacing John Edwards from July 31.
"He brings strong academic credentials as an economist to the Reserve Bank board," Mr Morrison said.
Shadow treasurer Chris Bowen thanked Mr Stevens for his service and welcomed Dr Lowe's appointment, describing him as one of the finest Australian economists of his generation.
