Australia's Reserve Bank has said the country's economy will only grow at a slower pace in the next couple of years.

Reserve Bank of Australia Governor Glenn Stevens has said though that Australia is in an enviable fiscal position which meant it could respond to shocks.

Stevens noted that economic growth this decade had been remarkably stable, but that would likely not last.

The central bank recently slashed its forecasts for gross domestic product growth to reflect the dampening impact of rising living costs and tighter financial conditions following four rate hikes in less than a year.