Dollar drop won't push up inflation: RBA

RBA governor Glenn Stevens says pressures such as wages are low and that only a "very, very large fall" in the Aussie dollar would push up inflation.

The RBA boss says only a "very, very large fall" in the Aussie dollar would push up inflation. (AAP)

The head of the Reserve Bank is confident the Australian economy will hit its inflation target of between two and three per cent despite the decline in the value of the Aussie dollar.

RBA governor Glenn Stevens says other inflationary pressures such as wages are relatively low and that only a "very, very large fall" in the exchange rate would push up inflation.

"We think we will hit the inflation target even with the lower exchange rate and even a little lower than this," Mr Stevens told the House of Representatives economics committee.

Mr Stevens said the large drop in the dollar against its US counterpart - about 20 per cent over the past year - was simply the local currency behaving as expected.