Police are negotiating with a gunman who they believe shot dead a man outside at a grain silo in the WA Wheatbelt region earlier today.

Police said they located Lachlan Bowles, 25, at a rural location late this afternoon.

"We are attempting to negotiate a peaceful resolution, however the situation is still unfolding," WA Police said

"Residents in the area are advised to remain alert."

Police confirmed that one man was dead and the homicide squad is investigating.

The father-of-one is being remembered as a "valued member of the Kellerberrin community".

Officers issued an "active shooter alert" earlier today and urged residents of the small farming community of Kellerberrin to stay inside and avoid travelling by any means.

Bowles was soon named by police as a person urgently sought after, with the public urged not to approach him if spotted but to immediately call triple zero.

Police allege the gunman went to a grain silo in Kellerberrin, 200km east of Perth, about 8.40am (10.40am AEST) and discharged his gun.

He then fled in a vehicle.

Police said he was believed to be "armed and dressed in camouflage clothing".

Bowles was believed to be driving a 2007 Grey Holden Commodore, registration 1CRB764.

Police said they believed he ditched the vehicle and was on foot around Mission Road, in the Kellerberrin and Bencubbin areas.

"A large number of police resources have been deployed to the Wheatbelt area," WA Police said in a statement.

"Members of the public in the area are advised to remain indoors at all times."

Dozens of police have been sent to the town from as far away as Perth.

9News spoke to a local resident who said he saw the alleged shooter in his shop yesterday.

He said there was "nothing untoward" about him and described him as a quiet and softly spoken man who kept to himself.

"The gentleman who is the shooter actually two years ago got an award from the community on Australia Day for being a volunteer ambulance driver," he said.

The nearby Shire of Merredin local government area told residents on social media that it has closed all council-run facilities until further notice.

"Please be advised that all Shire facilities (including the Admin Centre and Merredin Tip) will be closed until further notice, as per WAPOL advice to remain indoors due to the ongoing incident in Kellerberrin," a Facebook post read.

"We are monitoring the situation and are aware netball finals are planned to be played tonight at the Rec Centre.

"Facilities will reopen as soon as we receive advice this is possible."

A family daycare operator in the town told Nine newspapers earlier today she sent all the children in her care home to families after she received the alert.

"It's a bit shocking because it's such a small town," she said.

"I'm just waiting for a message to say that it's safe to leave."

Kellerberrin has a population of 877 people and sits on the Great Eastern Highway in the state's Wheatbelt region.

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Philip Lowe has used his final speech as Reserve Bank governor to call for more measured, nuanced debate around interest rate decisions and less "vitriol, personal attacks and clickbait".

The outgoing RBA boss, whose term ends on September 17, said society "had work to do" in how it responds to complex topics that are in the public interest.

"My experience here highlights the difficulties of communicating in the social media and digital age," he said.

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"Despite these difficulties, I have always felt a responsibility to explain complex ideas, and the trade-offs and uncertainties we face.

"I know that some of my explanations have missed the mark. But the media has a responsibility too.

"My view is that we will get better outcomes if the public square is filled with facts and nuanced and informed debate, rather than vitriol, personal attacks and clickbait.

"As a society, we have got work to do here."

Lowe used the speech, fittingly titled "Some Closing Remarks", to hit out at the coverage of some of his more infamous moments as RBA governor.

"There are many … points that have been attributed to me, including: a promise that interest rates would not go up until 2024; everybody needs to get a flatmate; people need to work more hours to make ends meet; and young adults should stay at home because of the rental crisis," Lowe said.

"Yet, I did not make these points. Nor did I choose Justin Timberlake's Can't Stop the Feeling to accompany me as I walked a recent podium."

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RBA, government 'did too much' during pandemic

Reflecting on the challenge posed by the COVID-19 pandemic, Lowe said the RBA and government provided too much economic support – but added that conclusion was only possible with the benefit of hindsight.

"At the RBA, we wanted to do what we could to build a bridge across to better times and to provide some insurance against the very worst outcomes. I know that the government had a similar mindset," he said.

"This approach worked. The Australian economy avoided falling into the abyss and then bounced back well.

"With the benefit of hindsight, my view is that we did do too much. But hindsight is a wonderful thing.

"None of us can predict the future and we have had to make decisions under great uncertainty and with incomplete information.

"We got some things right, but we got other things wrong."

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Lowe echoed comments by his successor, Michele Bullock, by saying setting interest rates is likely to get more difficult as factors like climate change cause inflation to fluctuate more.

He also called on the government to implement policies to address inflation, rather than solely relying on the RBA raising and lowering interest rates.

"My view has long been that if we were designing optimal policy arrangements from scratch, monetary and fiscal policy would both have a role in managing the economic cycle and inflation, and that there would be close coordination," Lowe said.

"The current global consensus is that monetary policy is the main cyclical policy instrument and should be assigned the job of managing inflation.

"This is partly because monetary policy is more nimble and it is not influenced by political considerations. Raising interest rates and tightening policy can make you very unpopular, as I know all too well. This means that it is easier for an independent central bank to do this than it is for politicians.

"This assignment of responsibility makes sense and it has worked reasonably well.

"But it doesn't mean we shouldn't aspire to something better.

"Monetary policy is a powerful instrument, but it has its limitations and its effects are felt unevenly across the community."