SYDNEY (May 5): Philip Lowe will replace Glenn Stevens as governor of the Reserve Bank of Australia for a seven-year term on Sept 18, Treasurer Scott Morrison said in a statement.

“Dr Lowe brings a wealth of knowledge and experience to the role of governor, having served as the RBA deputy governor since early 2012,” Morrison said. He is “well regarded in the central banking community, financial markets, and the Australian business community, and will reinforce existing confidence in the institution.”

Lowe, 54, inherits the post with diminished interest rate ammunition after the central bank eased policy to a record low of 1.75% to cushion the end of a mining investment boom and combat disinflation. Lowe was appointed deputy governor in February 2012, when Stevens described him as an “exceptional” economist.

“It was the obvious choice and shows the degree of continuity at senior levels of the bank,” said Adam Boyton, the Sydney-based chief economist in Australia at Deutsche Bank AG.

Stevens is the third successive RBA governor to be replaced by his deputy. He welcomed Lowe’s promotion in a statement following the announcement.

“It is a superb appointment,” he said. “There could be no one better qualified than Phil Lowe to lead the bank through the next seven years. The bank will be in the best hands.”

Lowe said in the same statement he was “deeply honored” and looked “forward to continuing the important work that the bank’s boards and staff undertake for the people of Australia.”

Lowe joined the RBA in 1980 and since then has obtained a PhD from Massachusetts Institute of Technology and had a stint at the Bank for International Settlements.

He studied at MIT, which fellow central bankers Ben S. Bernanke and Mario Draghi also attended and where others like Federal Reserve Vice Chairman Stanley Fischer and former Bank of England Governor Mervyn King taught. Lowe’s main macro-economic professors were Olivier Blanchard, who was chief economist at the International Monetary Fund until September, and Rudiger Dornbusch, who pioneered the theory that currencies overshoot in either direction in the short run before correcting over time.

Morrison also appointed Ian Harper as an independent member of the board of the central bank, replacing John Edwards whose term expires on July 30, Morrison said.The central bank’s new deputy governor role will be “considered in the second half of the year,” said Morrison.