A Reserve Bank board member has had his term extended by another year, as the federal government flags a review of the panel’s make-up and monetary policy.

Treasurer Jim Chalmers announced on Wednesday business leader Mark Barnaba had agreed to the 12-month extension.

Mr Barnaba’s five-year term was due to end on August 30.

“An accomplished business leader, corporate adviser and non-executive director, Mr Barnaba has been a well-respected and valued member of the Reserve Bank board,” Dr Chalmers said in a statement.

“I commend Mr Barnaba on his valuable contribution to the board so far and sincerely thank him for agreeing to continue in this capacity for the next 12 months.”

It came as Dr Chalmers also announced details of an independent review of the Reserve Bank’s monetary policy and make-up of its board, the first in more than three decades.

The terms of reference for the undertaking have been finalised, with a three-member independent panel appointed.

It will comprise external member of the Bank of England’s financial policy committee Professor Carolyn Wilkins, leading macroeconomist Professor Renee Fry-McKibbin and secretary for public sector reform Dr Gordon de Brouwer.

The panel will examine monetary policy arrangements, including whether the bank’s 2-3 per cent inflation-targeting framework is appropriate.

Dr Chalmers said the review would be the first since the current monetary policy was instituted in the 1990s, and would be approached with an open mind.

“I’m not aware yet of a better, more appropriate regime for Australia but that’s the whole point of the review,” he told the ABC.

“If they can learn from the Canadian experience of inflation targeting, if they can learn from the experience of other central banks around the world, I think that’s a good thing.”

Dr Chalmers also flagged possible changes on the RBA’s board.

“One of the things that I do want the review to look at is the breadth and depth of the expertise and experience that’s on the board,” he said.

“There will be appointments that we will be asked to make to the Reserve Bank board in this term of the parliament and I’d like to do that based on the best advice on the best mix of people.

“There are good people on the board right now but if there are ways we can make the experience and expertise on the board deeper and broader, then we should look for ways to do that.”

The announcement came as Reserve Bank governor Philip Lowe prepared to address the Australian Strategic Business Forum in Melbourne on Wednesday.

His speech, which will cover inflation and the future of money, comes amid warnings Australia’s inflation levels are set to increase further during the coming year.

It is expected the panel will produce its final report and recommendations to the government by March 2023.

The review will also consult with economic experts from Australia and overseas, as well as former Reserve Bank board members. The public will also be able to make submissions.

Dr Chalmers said the task was critical given the range of long-term challenges to the national economy on the horizon.

“The review will consider the RBA’s objectives, mandate, the interaction between monetary, fiscal and macroprudential policy, its governance, culture, operations and more,” he said.

However, the RBA’s payments, financial infrastructure, banking and banknotes functions will be excluded from the terms of reference, as will the function of the Australian Prudential Regulation Authority.

Analysis conducted in reviews of other central banks, such as the US Federal Reserve, will also be taken into account.