Reserve Bank governor Philip Lowe has conceded that further interest rate cuts are inevitable and called on government and business to help arrest the decline in growth.

Key points: Dr Lowe said the global appetite to save is high relative to the appetite to invest

Dr Lowe said the global appetite to save is high relative to the appetite to invest This has prompted low interest rates globally, which is in turn affecting the global economy

This has prompted low interest rates globally, which is in turn affecting the global economy The RBA governor said this issue was a task "for governments and businesses, not for central banks"

At a Reserve Bank board dinner following the third interest rate cut in four months, which has halved the official cash rate to a record low of 0.75 per cent, Dr Lowe said central banks globally were being forced to respond to slowing growth.

"Globally, the main issue at the moment is the uncertainty generated by a series of geopolitical events, particularly the US-China disputes over trade and technology," he said.

That, in turn, has undermined business confidence, with many firms globally delaying investment while others have been forced to deal with costly disruptions to trade.

But, according to the governor, a deeper malaise has infected the global economy; one that central banks have been wrestling with for some time.

"The underlying explanation for low interest rates globally is that the global appetite to save is high relative to the global appetite to invest.

"This is mainly a task for governments and businesses, not for central banks," he said.

"Whether or not this happens, only time will tell."

Calls for government spending to reduce bottlenecks and boost employment

But the problems aren't all global and the RBA governor once again used the opportunity to prod the Government into lifting its infrastructure spend, although in a far more subtle manner than recent months.

Business needed the confidence to expand, invest, innovate and hire, a goal he said should not be out of reach given Australia's relatively strong longer-term fundamentals.

"But it does require constant effort," Dr Lowe told the gathering.

"One part of this effort should be a renewed focus on structural measures to lift the nation's productivity performance," he said.

The RBA governor said many households had built buffers that would help with job losses. ( Reuters: Daniel Munoz )

Given the dramatic lift in population — which has stretched infrastructure, and particularly transport — in the nation's biggest cities, the RBA for most of the past year has led a growing chorus of economists calling for more government spending that could relieve bottlenecks and boost employment.

Dr Lowe also sounded a warning about the potential for a sudden financial shock, given asset prices were at elevated levels and that interest rates did not reflect the build-up of risk in the financial system.

"At our meeting today, we talked about the possibility that a shock somewhere in the global system could cause a recalibration, leading to a disruptive repricing of risk," he said.

That's central bank jargon for a financial or stock market crash.

Should that occur, our banks are in far better shape to cope with the fallout and rate in the top 25 per cent of banks worldwide, having been forced in recent years to squirrel aside emergency cash.

The great Achilles heel of the Australian economy — exorbitant household debt — so far has not caused any major problems.

The RBA governor said loan arrears, while rising, remained low and many households had built substantial buffers which would cushion them from job losses.

Despite that, Dr Lowe admitted around a quarter of all households with a mortgage had either no buffer or only a marginal cushion against rising unemployment.

In addition, almost 4 per cent of borrowers had loans that were larger than the value of their properties, with around half of those in Western Australia where property prices are still more than 21 per cent below their peak.

"So, this is an area that bears watching," he said.