In December, Australia's unemployment rate hit a multi-decade low of 4.2 percent. Lowe predicted that the rate could drop below 4 percent by the end of the year, the lowest rate since the early 1970s.
To maintain this trend, Lowe said the bank was prepared to maintain the current record low interest rate of 0.1 percent.
"I recognize that there is a risk to waiting but there is also a risk to moving too early," said Lowe addressing before a parliamentary hearing on Friday.
"Over the period ahead we have the opportunity to secure a lower rate of unemployment than was thought possible just a short while ago."
He said the bank is committed to "low and stable inflation", and would not consider raising interest rates until inflation is sustainably in the 2-3 percent range.
The central bank boss flagged some concerns surrounding future outbreaks of COVID-19 adding to the uncertainty in the Australian economy's outlook.
"The pandemic is not yet behind us and it is entirely possible that there will be more outbreaks," he said.
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