Banking & Saving - RBA: We cannot assume interest rate will remain low

An interest rate hike could be on the cards after the Reserve Bank of Australia said people cannot expect it to remain low.

The Reserve Bank of Australia (RBA) has warned people they cannot expect the interest rate to remain low, which could mean an increase is on the cards.

Glenn Stevens, governor of the organisation, told Channel 7's Sunrise programme that normal rates are a relationship between what someone pays for a mortgage or a small business loan and the cash rate, Reuters reported.

He added: "If you look back when the economy was stable and we had low inflation, the cash rate, that is the rate we decide on, the rate has been in the average of five per cent."

Mr Stevens admitted figures were cut before because there was an emergency, but he noted after the crisis situation is over there is no need to keep interest at a low level.

Earlier this month, the RBA increased the cash rate by 0.25 per cent to four per cent and said Aussie credit for housing had risen at a "solid pace", while some banks acted immediately after the news, with the Commonwealth Bank announcing plans to increase rates on two of its savings accounts.

By Emma North