The RBA could be out-voted by its own monetary policy board under changes backed by the government

In what would be a radical arrangement by international standards, the RBA Review has proposed that the the Monetary Policy Board, which would be in charge of setting interest rates, have nine voting members, including the Reserve Bank government and deputy governor, the Treasury secretary and six external experts.

The implications of the arrangement emerged as the opposition expressed anger over Treasurer Jim Chalmers' appointment of two new RBA Board members, workplace relations expert Iain Ross and financial services executive Elana Rubin.

Opposition treasury spokesman Angus Taylor said the Coalition was "very disappointed" by the Treasurer's decision.

Mr Taylor said the government accepted the recommendation of the RBA Review that appointments be made following a rigorous, merit-based process "and they didn't do that. They accepted the recommendations and then immediately ignored them, and that was incredibly disappointing".

The dispute mars what has otherwise been significant unanimity between the government and the opposition on the RBA Review and its recommendations, but is not considered likely to endanger bipartisan support for the reforms.

The Monetary Policy Board model, which is among 51 recommendations accepted in-principle by the federal government, raises the prospect that the central bank could have its monetary policy recommendations rejected by the board, potentially putting the organisation at odds with one of its two key decision-making bodies.

Deutsche Bank economist Phil Odonaghoe said he was "very surprised" by the proposed arrangement, which was almost unique among the world's major central banks.

Mr Odonaghoe said only the Bank of Japan had a similar set-up in which external policy committee members could technically out-vote central bank staff.

At major central banks including the US Federal Reserve and the European Central Bank, only internal appointees sit on the monetary policy committee. Of those banks that do include some external committee members, including the Bank of England, the Bank of Canada and the Reserve Bank of New Zealand, internal appointees hold the majority vote.

"This is a radical change," Mr Odonaghoe said. "This is a complete flip from what is now the case".

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The proposed change is part of a broader package of reforms aimed at increasing the depth of expertise around the table when setting monetary policy.

The RBA Review panel raised concerns that the RBA Board has been at times too compliant and accepting of the views of central bank staff, citing a period between 2016 and 2019 when it "never took a decision that went against the recommendations of the Reserve Bank executive" despite inflation consistently undershooting the 2 to 3 per cent target range throughout this period.

"There was not a sufficiently deep ongoing debate around the strategy of accepting gradual progress towards the Reserve Bank Board's targets," the review panel found, and said its recommendations were aimed at shifting the nature of the board from "what is in effect an advisory body to one that proactively shapes policy decisions".

"The Monetary Policy Board and its members should have a clear, strong and independent voice on monetary policy".

Under the proposed reforms, the board members will be recruited through a public call for expressions of interest, with candidates assessed by a panel comprising the Treasury secretary, the RBA governor and a third party against a set of criteria including economic expertise, analytical ability, strategic perspective, communications skills and leadership experience. The panel would prepare a shortlist from which the Treasurer would make her or his selection.

Mr Odonaghoe backed the selection process, which he said would help ensure the "best possible people" sat on the Monetary Policy Board.

But he said it was unclear how vote-based decisions would play out.

"With an external-majority, vote-based model, it is not at all impossible to have a scenario where the group of six external members uniformly disagree with the 'internal' members on a policy decision. And if that happens, the external view would be carried," the Deutsche Bank economist said.

While such a scenario would be unlikely most of the time, Mr Odonaghoe said it could manifest at times such as the present where there is significant disagreement about the correct level of interest rates.

"The extent to which this matters in practice remains to be seen. It will depend on who those external members are and how they vote," he said.