Reserve Bank governor Philip Lowe said a much more aggressive easing policy was needed to achieve higher employment growth because the data suggested "we are not making significant inroads" in absorbing spare capacity.

Dr Lowe said more interest rate cuts on top of the first move in almost three years, on June 4, would be needed to reduce unemployment and get inflation back to a more comfortable level.

"It is not unrealistic to expect a further reduction in the cash rate as the Board seeks to wind back spare capacity in the economy and deliver inflation outcomes in line with the medium-term target," Dr Lowe told the Committee for Economic Development of Australia in Adelaide on Thursday.

"It would, however, be unrealistic to expect that lowering interest rates by 0.25 of a percentage point will materially shift the path we look to be on."

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