Regrets? Philip Lowe has one, but it might not be what you think

Skirting his much-criticised early 2021 pronouncement that interest rates would remain low until 2024, Dr Lowe instead told a parliamentary committee that he wished he had understood more about the impact of COVID-19 when acting to support the economy.

"I wish I had understood the implications of the pandemic a bit more," the RBA governor said.

"The [situation] in early 2020 was incredibly scary and our mindset was to provide maximum support and insurance. In hindsight, we provided too much and that has implications now.

"If we had a better understanding, we would have responded differently."

The massive stimulus provided by the-then federal government and the Reserve Bank safeguarded growth and helped protect millions of jobs, but one of its legacies has been to stoke demand and fuel inflation.

Despite this, Dr Lowe said the "worst is over" for the country in navigating a path to lower inflation while containing unemployment below pre-pandemic levels, while acknowledging that some households were finding current conditions "very difficult".

In his final appearance before the House of Representatives economics committee as central bank governor, Dr Lowe said the bank's central scenario was that economic growth would be "subdued" for the rest of 2023 before gradually strengthening to reach 2.25 per cent by the end 2025.

"The ongoing moderation in inflation will mean that real incomes start rising again and this will ease the financial pressures that people are feeling," he said.

Offering hope to wage earners, the governor said real wage growth (wage increases that exceed inflation) were likely to occur late this year or early next year.

But he reiterated the need to bring inflation down.

Asked by Liberal National Party MP Garth Hamilton about whether some households were feeling more pain than others, Dr Lowe said all were under pressure.

"Everybody is hurting, because high inflation is eroding people's real incomes," he said. "We are seeing a cut back in spending across the board.

"High inflation is causing everyone pain."

While acknowledging that high interest rates were unpopular, Dr Lowe said the biggest blow to living standards was from high inflation.

He admitted the pain felt by younger households with large mortgages or who were renting had been particularly acute, but said the pressure was likely to be more evenly felt in future.

"We will see a more equal experience in the next 12 months than we have seen in the past 12 months," Dr Lowe said.

"The biggest drain on households has been high inflation. That really does eat into real household disposable income."

Dr Lowe said inflation peaked late last year, but has since declined and "we expect further declines over the quarters ahead".

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"The data are consistent with the Australian economy continuing to travel along that narrow path that I have spoken about for some time," he said.

"That path is one that leads to inflation coming down within a reasonable timeframe and the unemployment rate remaining below the levels of the past 40 years."

But he admitted high interest rates were hurting many.

"It is clear that some households who borrowed at low interest rates during the pandemic are finding conditions very difficult, as are some renters," the governor said.

"The decline in real incomes and higher interest payments are squeezing the budgets of many households.

"And, while around 1 million borrowers have already transitioned from low fixed-rate loans to loans with higher interest rates, a similar number will make that transition over the next 18 months.

"Consumer confidence is low and rents are increasing quickly as vacancy rates are very low across the country."