PHOTO: Reserve Bank of Australia Governor, Philip Lowe, speaking at the Australian Business Economists Anika Foundation fundraising lunch in Sydney. Photograph: Dean Lewins/AAP

The Australian dollar has fallen sharply after Reserve Bank governor Philip Lowe said that the central bank could keep cutting the cash rate in the coming months to support the ailing economy.

After two successive reductions in the rate in June and July left it at an unprecedented 1%, Lowe said in Sydney on Thursday that borrowing costs were likely to remain low for some time.

“Whether or not further monetary easing is needed, it is reasonable to expect an extended period of low interest rates,” Lowe said.

His comments will harden the resolve of forecasters who have predicted that the bank will continue to cut the cash rate. While another cut at the bank’s board meeting on 6 August seems unlikely, most experts believe the rate will reach 0.5% by early 2020 with one cut in the spring and another in the new year.