Interest rates were now "towards the top end of the range" Mr Stevens told the House of Representatives economics committee meeting in Sydney.
Economists said the four interest rate rises in rapid succession since August seemed to have done the job, with retail sales dropping for the second month.
The Australian Bureau of Statistics retail sales data for February showed a 0.1 per cent fall, and economists expected further falls for March.
Opposition Treasury spokesman Malcolm Turnbull, who has kept himself on the backbench committee despite his frontbench role, seized on the RBA's new take on inflation and argued it was confirmation the federal Government and the Treasurer Wayne Swan had overcooked the inflation scare.
"The governor was very, very clear that inflation is not out of control, it's under control," Mr Turnbull said. "I think it's very reassuring because it offsets the language being used by the Treasurer."
But the Treasurer said the comments were disingenuous because the governor had admitted inflation was a problem. "Mr Turnbull's claim that inflation is not a problem has been flatly rejected," the Treasurer said. "Unlike Mr Turnbull, we understand the financial pressure on families, and that's why we are so determined to tackle inflation and put downward pressure on interest rates."
Mr Stevens also rejected speculation Australia was heading towards a recession. "Recession? I don't think we are going to have one any time soon," Mr Stevens said.
He said that while there was definitely some mortgage stress, fewer people were being squeezed than the statistics suggested.
The RBA boss said only 15,000 home owners were more than 90 days behind in their mortgage payments -- a comparatively low figure compared with the total number of mortgage holders.
Mortgage stress is defined as a household spending more than 30 per cent of their income repaying home loans.
