The head of the Reserve Bank of Australia has flagged more rate rises in coming months.

However, RBA Governor Philip Lowe said the case for a slower pace of tightening was becoming stronger as the cash rate level rises.

“But how high interest rates need to go and how quickly we get there will be guided by the incoming data and the evolving outlook for inflation and the labour market,” he told the Anika Foundation in Sydney on Thursday.

Dr Lowe’s speech follows another rise of 50 basis points in the cash rate on Tuesday to tame soaring inflation. It was the fifth interest rate hike since May.

The RBA governor also addressed calls for his resignation from the Greens and Nationals senator Matt Canavan, based on an earlier assertion that rates would not start rising until 2024.

“I can assure you I have no plans to resign,” he said.

Despite surging inflation, Dr Lowe said the economy was also showing signs of strength, including record low unemployment.

“People have jobs. Kids have opportunities. Household incomes are rising. That’s what I would say to people who don’t like me in my job,” he said.

Dr Lowe also said he never promised rates would not start rising until 2024.

“What we said was we thought the pandemic was going to have long-lasting disruptive effects on the economy that would keep inflation low and would keep unemployment high for years, and we wanted to do what we could to prevent that,” he said.

“And that meant we were likely to keep interest rates low for a long period of time out to 2024, so it was highly conditional.”

In his speech, Dr Lowe used the opportunity to explain the board’s “very large forecast miss” to foresee the surge in inflation, which triggered the aggressive policy tightening.

“Forecast misses of this scale should lead to soul-searching by forecasters, and they certainly have at the RBA,” he said.

Dr Lowe laid out the reasons for the unexpected lift in inflation, starting with Russia’s invasion of Ukraine limiting the production of energy.

He also said there was a surge in demand for goods at a time when COVID was interrupting production and therefore supply.

“The result was that many industries quickly found themselves on the sharply upward-sloping part of the supply curve, and prices increased,” Dr Lowe said.

He said the home building sector was a good example of this trend.

“Very strong demand in this sector – partly due to low interest rates and government grants totalling up to $35,000 for some first-home buyers – came up against COVID-related problems on the supply side,” Dr Lowe said.

“The result was a big jump in prices, which has had a material impact on the overall inflation rate in Australia.”

Regarding further rate hikes, Dr Lowe said the board was “not on a pre-set path”.

He flagged three areas of uncertainty the board would be monitoring closely.

The first was the gloomy state of the global economy.

“Some slowing in the global economy will help bring inflation down, but a sharp slowing would make the job of delivering a soft landing here in Australia much harder,” Dr Lowe said.

He said the bank was also carefully watching shifts in inflation psychology.

“By this, I mean the general willingness of businesses to seek price increases, and the willingness of the community to accept price increases,” Dr Lowe said.

He said it was unclear how households would respond to higher interest rates, with the full effects of rapidly rising rates still playing out.

By Poppy Johnston in Canberra

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