Despite keeping interest rates on hold in April, RBA governor Philip Lowe said further rate rises were on the horizon, particularly if firms kept lifting their prices and workers continued asking for higher pay.
The decision to keep interest rates on hold at 3.6 per cent in April followed 10 straight rate rises since May last year.
Dr Lowe told the National Press Club in Sydney on Wednesday the board decided to keep rates on hold to give the increases time to work through the economy, noting the impact of interest rate movements tended to lag.
He also said it was still "way too early" to be talking about interest rate cuts.
In his speech, Dr Lowe said a few lingering supply-side inflation drivers could complicate the board's job to return inflation to target.
Temporary supply-driven shocks such as high shipping costs had normalised but housing and energy remained two persistent sources of inflation.
The reopening of international borders was driving a sharp uptick in Australia's population, he said, but housing supply would take years to catch up to the shifting demographics.
Although the shortage of housing could trigger more people to form share houses and other shared living arrangements, Dr Lowe said supply and demand would likely remain unbalanced and keep rent inflation "quite high for a while".
He also said global supply-side factors were largely responsible for high energy prices, but if the transition to clean energy was not done smoothly then prices might stay higher for longer.
Sluggish productivity growth was also flagged as a "general supply issue" and the governor said the nation would have to endure slower economic growth to get inflation down.
Dr Lowe said if these issues stuck around, a more "decisive" monetary policy response might be needed.
The prospect of persistent supply-side inflation, he warned, was likely to prompt businesses to lift their prices and workers to ask for more money to account for costs.
Asked why the RBA was holding fire on more rate rises while other central banks such as the Reserve Bank of New Zealand continued to hike, Dr Lowe said he was prepared for inflation to ease more slowly in the interests of keeping most people in their jobs.
He also said Australia was better positioned than many other nations, with milder wage pressures and a large share of rate-sensitive variable rate mortgages.
On the role of government in managing inflation challenges, Dr Lowe welcomed the government's decision to return the boost of revenue from higher commodity prices to the budget bottom line.
Asked if a lift to welfare payments like JobSeeker was viable in the high inflation environment, he said there could be scope to "help certain parts of the population who are really suffering".
Treasurer Jim Chalmers said the upcoming May budget would continue the work of budget repair as well as offering targeted cost-of-living relief.
"The budget will be all about providing security in uncertain economic times, giving Australians the help they need and the economic future they deserve," he said.
