The Reserve Bank board kept interest rates at 4.1 per cent to buy more time to assess the effect of its previous rate rises, but new governor Michele Bullock warned further rate rises may still be necessary to get inflation down.

In her first board statement as governor, Bullock said the 4 percentage points worth of interest rate rises brought in by the central bank since May last year are working to establish a better balance between supply and demand, but inflation will remain above the bank’s target of 2-3 per cent for some time.

“Inflation in Australia has passed its peak but is still too high and will remain so for some time yet,” she said.

“Timely indicators on inflation suggest that goods price inflation has eased further, but the prices of many services are continuing to rise briskly and fuel prices have risen noticeably of late. Rent inflation also remains elevated.”

Bullock echoed her predecessor Philip Lowe’s comments about the dangers of having inflation remain too high for too long.

“High inflation … erodes the value of savings, hurts household budgets, makes it harder for businesses to plan and invest, and worsens income inequality,” she said.

“And if high inflation were to become entrenched in people’s expectations, it would be very costly to reduce later, involving even higher interest rates and a larger rise in unemployment.”

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Bullock warned there were still uncertainties ahead for the economy, including the delayed effect of previous rate rises, and the global impact of China’s economic woes.

“Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will continue to depend upon the data and the evolving assessment of risk,” she said.

“The board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome.”