Floods inundating Australia's northern state of Queensland could cut up to 1 percentage point from economic growth, according to a member of the Reserve Bank of Australia's board -- the largest estimate yet for the potential damage.

The comment knocked the Australian dollar down over half a U.S. cent to a four-week low of $0.9803 and reinforced expectations that a further increase in interest rates was now unlikely for months to come.

Warwick McKibbin, an academic and a member of the central bank's policy making board, was quoted in the Sydney Morning Herald on Wednesday as saying a fair chunk of Queensland's economy had just stopped.

"If you look at the infrastructure damage and all the networks that have been broken, a hit to the economy of 1 percent is not out of the question," McKibbin said.

A percentage point of Australia's A$1.3 trillion in annual gross domestic product (GDP) is equal to around A$13 billion.

Most bank economists had estimated the drag could be at most 0.5 percentage points, with rebuilding adding to growth once the floods had passed.

Queensland accounts for around a fifth of the national economy and more than 80 percent of Australia's coking coal exports, much of which has been hit by the flooding.

Market have steadily pared back the chances of another rise in the central bank's 4.75 percent cash rate since the floods first hit in December. Interbank futures imply almost no probability of a move before July and just a 50-50 chance by October.