The Reserve Bank may be forced into cutting official interest rates to 0.25 per cent and start untraditional methods to boost the economy if the federal government does not start its own economic stimulus program, the NAB has warned.

As the closely-watched Westpac survey of consumer sentiment showed more than half of taxpayers are unlikely to spend all of their recent tax refund, the NAB said there were growing risks to the domestic economy as well as increasing uncertainty about the world economy.

NAB chief economist Alan Oster says the RBA may have to take official rates to 0.25 per cent if there is no fiscal stimulus forthcoming. Credit:Jessica Shapiro

The RBA has cut official interest rates to 1 per cent with markets expecting another cut by the end of the year.

NAB chief economist Alan Oster said growth was falling short of RBA forecasts and unemployment, which the bank wants to see drop to 4.5 per cent, is likely to edge upwards.