"If demand growth is not sufficient, the board is prepared to provide additional support by easing monetary policy further," Lowe said in a speech to a charitable foundation lunch.
"Whether or not further monetary easing is needed, it is reasonable to expect an extended period of low interest rates," he said.
Peter Cavanaugh, the senior client advisor at Bancorp Treasury Services, says Lowe's comments had pushed the Australian dollar lower and lifted the New Zealand dollar.
"The market read it as positioning for more easing," Cavanaugh says. "It's a central banker saying it might go down but it's not going up for a while."
Lowe's speech followed yesterday's call by Westpac chief economist in Sydney, Bill Evans, that the RBA will cut rates twice more, once in September or October and then again in early 2020.
The RBA's cash rate is already at a record low 1 per cent. If Evans is right, it will be down to 0.5 per cent by early next year.
"He's got a lot of credibility on that subject," having made correct calls in the past, Cavanaugh says.
But the RBA is just one among many central banks expected to cut interest rates. The market has fully priced in a 25 basis-point cut by the Federal Reserve next week and economists are forecasting our central bank will cut its official cash rate in August. The rate is at a record low 1.5 per cent following a cut in May.
The New Zealand dollar was trading at 96.05 Australian cents from 96.12, at 53.68 British pence from 53.72, at 60.12 euro cents from 60.22, at 72.40 yen from 72.57 and at 4.6038 Chinese yuan from 4.6089.
The New Zealand two-year swap rate eased to 1.2613 per cent from 1.2927 yesterday, while the 10-year swap rate fell to 1.6900 per cent from 1.7275.
