Reserve Bank governor Philip Lowe says he will not be pressured by financial markets to raise interest rates until prices are rising at a sustainable pace, as the bosses of Westpac and Bendigo and Adelaide Bank warned customers to gear up for higher borrowing costs.

Dr Lowe on Friday reiterated it was “plausible” the cash rate may rise from 0.1 per cent this year after the Ukraine war had boosted inflation, adding it would be “prudent” to prepare for higher rates. However, he emphasised wage growth was still soft for most workers, and said the market’s expectation of rate hikes this year did not weigh on the RBA’s decisions.

“I don’t feel mounting pressure,” Dr Lowe said at an Australian Banking Association conference. “We do what we think is the right thing at each of our meetings, so the pressure, it’s great for media stories, but I don’t feel that myself.”

Financial markets are pricing increases in the cash rate from 0.1 per cent today to 2.3 per cent in 18 months, JP Morgan said on Friday, as the surge in commodity prices since the Ukraine raises the prospect of higher inflation.

While the timing of rate hikes remains uncertain, Dr Lowe said his overarching message was “that it would be prudent to plan for an increase,” which would be the first RBA rate hike in more than 11 years.

“For many borrowers that’s going to come as quite an unwelcome development, although I know from the letters that I get every day when I turn up at work that many depositors have a different view,” Dr Lowe said.

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Speaking at the same event, Westpac chief executive Peter King tipped rate rises this year, and said other key priorities for banks in 2022 would be providing COVID-19 support, digitising banking services, and dealing with climate risks.

Mr King emphasised that borrowers had been stress tested with their ability to cope with significantly higher rates than they were currently being charged.