By James Glynn

SYDNEY--The Reserve Bank of Australia on Tuesday kept official interest rates at record lows, while sounding a warning about soaring house prices, hinting that a tightening of mortgage lending regulation to calm the housing market is under consideration.

"The Council of Financial Regulators has been discussing the medium-term risks to macroeconomic stability of rapid credit growth at a time of historically low interest rates," RBA Governor Philip Lowe said in a statement after the central bank's board meeting.

"In this environment, it is important that lending standards are maintained and that loan serviceability buffers are appropriate," he added.

The central bank held the official cash rate at 0.1%, where it has stood since late 2020.

Mr. Lowe said it will take some time before wages growth and the rate of inflation rise, creating the necessary conditions for an interest-rate increase.

"The central scenario for the economy is that this condition will not be met before 2024. Meeting this condition will require the labor market to be tight enough to generate wages growth that is materially higher than it is currently," he said.

Mr. Lowe's warning on house prices comes as senior bankers, the Organization for Economic Cooperation and Development, and Treasurer Josh Frydenberg have also indicated growing concern about falling housing affordability with house prices up by more than 20% in 2021.

The dovish interest-rate guidance from the RBA comes even as inflation indicators globally are pointing upward, with financial markets betting current price gains won't be transitory, forcing the central bank to recant its guidance, and raise interest rates earlier than expected.

Mr. Lowe recently chided financial markets for pricing in interest-rate increases as early as late 2022, yet other central banks are already taking steps toward returning policy setting to normal, making the RBA a laggard among its global peers.

Australia's economy has been battered hard by an outbreak of the Delta strain of the Covid-19 virus since June, but lockdowns look set to end in coming weeks, setting off a strong recovery in 2022.

The economy has demonstrated a lot of resilience during the downturn despite more than half the population being placed into lengthy lockdowns since midyear.

The rates of vaccination against Covid-19 are expected to be above 80% in some parts of the country within weeks, buoying expectations that mobility will be high once lockdowns end.

Write to James Glynn at james.glynn@wsj.com

Corrections & Amplifications

This story was corrected at 0415 GMT. The original, in the seventh paragraph incorrectly referred the Organization for Economic Cooperation and Development as as the Organization of Economic Cooperation and Development.

(END) Dow Jones Newswires

10-05-21 0012ET