Reserve Bank governor Philip Lowe has attempted to hose down talk of a hike in interest rates, saying Australia won't be blindly following central banks overseas.

"Some central banks are now starting to increase interest rates and others are considering when to withdraw some of the monetary stimulus that has been put in place," he told a lunch in Sydney organised by Australian Business Economists.

"This has no automatic implications for monetary policy in Australia."

"These central banks lowered their interest rates to zero and also expanded their balance sheets greatly. We did not go down this route."

"Just as we did not move in lockstep with other central banks when the monetary stimulus was being delivered, we don't need to move in lockstep as some of this stimulus is removed."

However he said the RBA would be reluctant to cut rates, even if weak wage growth and weak inflation made it appear necessary.

Wage growth had slipped to a record low of 1.9 per cent, and the June quarter consumer price index, released just before he spoke, had the annual inflation rate falling from 2.1 to 1.8 per cent.

"We are intent on delivering Australians an average rate of inflation over time of between 2 and 3 per cent," he said.

"For a central bank with a single objective of inflation, the answer is relatively straightforward. Inflation is too low, so you do what you can to get inflation up. You need more monetary stimulus."

"This approach does carry risks, though."

"The monetary stimulus is likely to push asset prices higher and encourage more borrowing. Faced with low inflation, low unemployment and low interest rates, investors are likely to find it attractive to borrow money to buy assets."

"Household debt is high and rising faster than the unusually slow growth in incomes."

Just as we did not move in lockstep with other central banks when the monetary stimulus was being delivered, we don't need to move in lockstep as some of this stimulus is removed.

Philip Lowe

"These developments have had a bearing on the setting of monetary policy. We have not sought to stimulate a rapid lift in inflation. The fact that the labour market has been generating sufficient jobs to keep the unemployment rate broadly steady has allowed us to be patient."

Dr Lowe said said he would welcome a gradual pickup in wage growth, although he said he wasn't going as far as encouraging workers to demand higher wages from their employers as had been reported earlier in the year. 

"The best outcome for both workers and firms is for any pick-up to be underpinned by a lift in productivity growth and more high-skill jobs."

"But even the current rate of productivity growth could sustain some increase in wages growth over time. Indeed, some pick-up is incorporated into the Bank's forecasts for the economy."

More to come...