The Reserve Bank of Australia is ready to ease monetary policy further if needed, Governor Philip Lowe said.

"If demand growth is not sufficient, the Board is prepared to provide additional support by easing monetary policy further," he said.

It is reasonable to expect an extended period of low interest rates, Lowe added. It will be some time before inflation is comfortably back within the target range.

The RBA had reduced its benchmark rate in June and July, by 25 basis points each. This was the first back-to-back rate cut since mid-2012.

The governor said two rate cuts will support demand. Recent tax reductions, higher commodity prices, some stabilization in the housing market, ongoing investment in infrastructure and a lift in resource sector investment will also support the economy, he noted.

The bank expects these factors together with rate cuts to put pressure on the economy's supply capacity and lift inflation in a reasonable timeframe, Lowe said.