RBA governor says interest rates not expected to rise

The Reserve Bank of Australia said there is no interest rate rise on the cards, despite speculation that it was considering an increase of the national borrowing rate.

The cash rate has been at a record low of 2.5 percent for 12 months and is expected to stay there until, at least, early next year.

RBA governor Glenn Stevens acknowledged that the historically low interest rates were affecting those with money tucked away in bank accounts.

"Right now savers are feeling the pinch of very low rates of interest on the safe assets that they hold and they're feeling prompted to accept, in many cases, a little bit more risk to get the return they're seeking," he told a parliamentary committee on Wednesday.

Mr Stevens said there are more savers than borrowers and there will come a point where you don't want to punish the savers too much further.

"That distribution of income is something I think about a lot, although popular commentary regards low interest rate as better that's not necessarily true," he said.

Mr Stevens comments come as the jobless rate in Australia hit a 12 year high of 6.4 percent last month, with the RBA predicting that growth will fall below 2 or 3 percent in the near future.

Inflation is expected to remain consistent at 2 to 3 percent with consumer spending set to increase in line with incomes, if not slightly faster.

"The removal of the price on carbon will lower inflation temporarily over the coming year," Mr Stevens said.

The RBA governor also said the board saw some value, given the present conditions, in maintaining a "sense of steadiness and stability."

He said at some point business would need to respond to trends indicating sustainable increases in demand, which would mean their current estimations could be considered conservative.

"The frustrating thing is that no one can say when that will happen, or just what might be the proximate trigger," Mr Stevens said.