Amid a barrage of questions during a House committee on Friday, RBA governor Philip Lowe outlined a 10 per cent fall in national property prices would likely happen due to rising interest rates and flagged slower growth was needed to allow younger Australians to enter the market.

"This is not a forecast but it would not surprise me if prices came down by (an) accumulative 10 per cent," he said during the hearing.

Dr Lowe also outlined the need to prioritise bringing down the budget deficit to free up more funds to pay for critical services and infrastructure, urging for structural reform to increase the economic pie the government can draw from.

On housing, the governor also indicated a lack of planning and stock were contributing factors aside from low interest rates which have caused rapid growth in dwelling values.

He noted people during the pandemic wanted more space and in recent years new apartment dwellings had slowed, both of which were adding to higher rental yields.

"If we want to address high rental costs, the solution isn't interest rates," he said.

"It's more supply, changing planning (and) arrangements in property and foreign tax.

"I know interest rates get blamed for lots of things, but I don't think we should be blamed for higher rents for most people."

Further rate hikes are scheduled over the coming months to curb rising inflation which is set to peak in the December quarter at 7.75 per cent.

Higher inflation has been spurred on by COVID-19 supply disruptions and commodity shocks due to the Ukrainian conflict. The RBA has acknowledged these factors brought forward its decision to hike rates, which it claimed would likely stay at 0.1 per cent until at least 2024.

Dr Lowe said slower housing growth was needed so younger Australians were not priced out of the market, claiming structural reforms on tax arrangements and transport were needed to lower buy-in costs.

"I think if we're really serious about lowering the cost of housing, relative income, there's other things we've got to tackle," he said.

"Interest rates, you know, we raised them for a while and housing prices came down to be more affordable, but it's not a sustainable solution because it's just cycling around this higher level."

On other structural reforms, the head of the RBA outlined fiscal reforms were needed and claimed funding of services could not be put on the "national credit card".

"I do worry how as a community and society we're going to tackle this need to pay for the things that we want as a community and the government to deliver for us," he said.

"The best option here is to do structural reform, to have a bigger pie. So there are more resources to pay for aged care disability, get a great education and defence."

Opposition spokesman for Treasury Angus Taylor said the federal government needs to reign in spending to avoid adding more pressure to inflation.

"The government must avoid adding more structural spending to the budget that will put further pressure on inflation," Mr Taylor said.

"It's critical monetary policy and fiscal policy work together to overcome these challenges as they did in the pandemic."

The RBA has appeared in front of the parliament during a heightened period of inflation which has spurred the central bank to invoke its most aggressive series of rate hikes since 1994.

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Interest rates began rising in May. The current cash rate is 2.35 per cent. The market is also pricing in another 50 basis point hike for October.

Rising interest has fuelled a backlash against the RBA over its forward guidance. However, the governor hit back at these claims, saying it was a guide based on the current economic forecasts during the pandemic.

The governor highlighted the bank's core objective was to control inflation as soon as possible, stating higher levels would cause greater damage to the economy and income equality.

Assistant governor Luci Ellis said central banks around the world got the forecasts wrong in terms of inflation, but highlighted the path of the pandemic during 2020 and 2021 was highly uncertain and unpredictable.

The RBA expects inflation to return to the target range of 2 to 3 per cent by 2024.

Dr Lowe flagged US inflation as a leading area of concern for the global economy and urged wage growth in Australia needed to be controlled. He said the higher levels of inflation in the US and Europe was being driven by higher wage growth.

In a number of European countries, real incomes have started moving back due to high inflation outpacing wages growth.

"The situation in Europe is very troubling, not least because of the extraordinary increases in energy prices," Dr Lowe said in his opening statement.

"And in the United States, the Federal Reserve has indicated that monetary policy will need to become restrictive to lower inflation.

"It will be difficult for Australia to stay on that narrow path to a soft landing if there is further material bad news on the global economy."