Reserve Bank of Australia governor Glenn Stevens has reiterated that the central bank remains prepared to cut interest rates further to help secure a "durable upswing" in the economy.

Mr Stevens says the Australian economy is well-placed for expansion toward the end of this year, with the recovery expected to be fairly gradual and inflation "most likely" to decline for some time.

"That in turn means, as the statement following this week's board meeting indicated, that some scope remains to ease monetary policy further, if that were to be helpful to securing a durable upswing," Mr Stevens said in Townsville today.

"The emphasis on durable is important."

Mr Stevens, who was speaking at James Cook's University's "business excellence series in the tropics" lunch in Townsville, described a durable expansion as "one that is more balanced than the last one".

The RBA kept interest rates unchanged at a 49-year low of 3 per cent at its June board meeting on Tuesday.

Mr Stevens said it was likely economic activity remained subdued in the June quarter, with the rapid decline in business investment "almost certainly continuing".

"While consumer spending has held up quite well so far, it may be weaker over the next few months, as the one-off government payments pass and rising unemployment starts to weigh on incomes and willingness to spend," Mr Stevens added.

But public spending was likely to record significant growth in the year ahead.

Mr Stevens said it would be "a while yet" before the effects of lower interest rates and the boost to the first home owner grant were reflected in data on construction work done.

But figures which have shown a pick-up in borrowing for housing over the past six months was "what would be expected if an upturn in residential investment spending is to begin later in the year".

The Australian economy grew by 0.4 per cent in the March quarter, while most other developed economies recorded negative growth.

Mr Stevens said it was "reasonable to think" that the actions of policymakers meant the downturn in the local economy was shallower than would otherwise have been the case and would help establish conditions conducive to recovery.

He was also upbeat about the prospects longer-term.

"Our expectation remains that the economy will be well placed for expansion towards the end of this year," he said.

"There are good grounds to think that we can emerge from the current global recession with our economy largely free of the problems in the financial sector, the stresses on public finances and the general disillusionment facing a number of other economies."

Mr Stevens also noted the "good fortune" of Australia's position in relation to China.

"A pick-up in China is relatively beneficial to Australia," he said.

"China does not publish quarterly GDP growth rates, but our best estimates are that the March quarter growth rate picked up relative to the weak outcome in the December quarter."

Mr Stevens also said the RBA board has not felt the need the lower the cash interest rate to very low levels, or "effectively zero", like some other countries.

This was because Australia's economic situation wasn't as dire and domestic rate cuts already implemented have had a more direct effect on borrowers.

"It is the intention of current monetary policy settings to lower debt-servicing costs, assist efforts to reduce leverage and support demand," he said.

"It would be counterproductive, though, if further reductions in interest rates induced a large number of marginal borrowers into debts they could service only at unusually low interest rates.

"This is a reason for care, both by the Reserve Bank and private lenders, and I note that lenders are being a bit more conservative on non-price loan conditions for households."

AAP