"The question of whether they might be reduced further remains, as I have said before, on the table."
Rates are already at an all-time low of 2.0 percent having been cut twice this year, and the RBA has said that further action is possible given a benign outlook for inflation.
Yet Stevens was quick to point out the risks of yet lower rates, particularly that it might encourage a return to the borrowing binge of the early 2000's.
"In meeting the challenge of securing growth in the near term, the stability of future economic performance can't be dismissed as a consideration," said Stevens. "A balance has to be found."
Read MoreAustralia's RBA sets steady rate course, seeks weaker Aussie dollar
Recently the central bank has been concerned that borrowing to invest in property was heating up home prices and regulators have taken steps to restrain lending by banks.
Stevens said he has also been keen to see the Australian dollar "somewhat lower" in order to help offset a downturn in mining investment and commodity prices.
"That adjustment seems to be occurring, with relatively little disruption, and is having an expansionary effect," he said. The local currency hit a six-year low against the U.S. dollar this week and is down 21 percent on July last year.
Stevens noted that the Australian labor market was performing better than he had expected just three to six months ago, with employment growing fast enough to stop a further increase in the jobless rate.