By Wayne Cole

SYDNEY The head of Australia's central bank will not be reappointed for a second term as the Labor government seeks a new pair of hands for an institution badly scarred by criticism over sharply rising interest rates, several media outlets reported on Friday.

Reserve Bank of Australia (RBA) Governor Philip Lowe's current seven-year term is due to finish on Sept. 17, and will now mark the end of his 43-year career at the bank.

Treasurer Jim Chalmers and Prime Minister Anthony Albanese are due to hold a media conference in Canberra later on Friday morning.

Contenders for the job include current RBA Deputy Governor Michele Bullock and Jenny Wilkinson, who heads the government's Department of Finance. Either would be the first female in the job. Also in the frame is Steven Kennedy, the head of the federal Treasury.

The candidates for the position, which comes with a A$1 million ($688,000) annual salary, are well respected by economists and financial markets showed little reaction to the news.

The government has been under pressure to dump Lowe for encouraging people to borrow in 2021 by saying interest rates were unlikely to rise until 2024, only to start hiking two years early in mid-2022.

The central bank has since lifted rates 12 times to a decade-high of 4.1%, adding hundreds of dollars to monthly mortgage repayments at a time when a cost of living crisis is already stretching household budgets.

Just this week, Lowe said it was possible rates would have to rise yet further to bring inflation to heel. He is due to chair the next two policy meetings in August and September.

Lowe had also said he would be honoured to stay at the bank if asked, but would understand if the government wanted a new leader.

His two predecessors, again both career central bankers, were reappointed to second terms and each served 10 years in total.

The RBA is undertaking the biggest reorganisation in three decades after an independent review into its operations recommended sweeping changes to the way policy was formulated and communicated.

Speculation about a change at the top has been brewing for months as rates kept rising, leading Lowe to take the extraordinary step of apologising to any borrowers who had acted on his policy assurances.

The decision comes as Lowe is due to accompany Chalmers to a Group of 20 meeting in India next week.

The leader of the Liberal National opposition, Peter Dutton, this week said Kennedy and Wilkinson should not be considered for the role because of their relationships with the government.

Chalmers has sole power over the appointment, but has consulted with shadow treasurer, Angus Taylor, about the decision.

($1 = 1.4518 Australian dollars)

(Reporting by Wayne Cole and Renju Jose in Sydney; Editing by Leslie Adler, Jamie Freed and Lincoln Feast)