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The Reserve Bank of Australia (RBA) announced on Tuesday that it would remove its 2024 target to increase interest rates, signalling an early economic recovery.

"The decision to discontinue the yield target reflects the improvement in the economy and the earlier-than-expected progress towards the inflation target," said RBA Governor Philip Lowe.

The bank has cut interest rates to "rock-bottom levels" and engaged in quantitative easing to help Australia's economy weather the economic impact of the pandemic, reports Xinhua news agency.

However, last week inflation rates in Australia rose to an almost seven-year-high of 5 per cent, which has meant higher prices on particular goods.

Lowe chalked the increase to higher petrol prices and disruptions in global supply chains.

"A further, but only gradual, pick-up in underlying inflation is expected," he said.

Lowe hinted that, as wage growth picks up, interest rates could be raised as early as late 2023.

He said the central bank's board would be "patient" while waiting for the gradual increase of wages growth.

In regards to Australia's soaring property prices, which have surged over 20 per cent nationally in the last year, Lowe emphasised the importance of banks ensuring home-buyers were granted serviceable loans.

"It is important that lending standards are maintained at a time of historically low interest rates," he said.

The bank would maintain Australia's cash rate at 0.1 per cent as well as its bond buying policy at A$4 billion per month until mid-February 2022.