The RBA has left the interest rate untouched at 0.10% as it waits to see the fallout from JobKeeper being axed

RBA Governor Philip Lowe. (Dominic Lorrimer)

• The Reserve Bank of Australia (RBA) has left the official cash rate at 0.1% at its monthly meeting on Tuesday.
• The move comes at Governor Philip Lowe and the RBA board are left waiting for the full impact of JobKeeper to become apparent at the end of May.
• In the meantime, they remain concerned that “unemployment is still too high” and “will be monitoring trends in housing borrowing carefully.”
• Visit Business Insider Australia’s homepage for more stories.

Australia’s powerful central bank is stuck in a no man’s land for the next few months as it waits to get its first glimpse of how the economy is really faring.

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On Tuesday, the Reserve Bank of Australia (RBA) predictably left the official interest rate at 0.10%, noting it remains concerned by the property market.

“Housing markets have strengthened further, with prices rising in most markets. Housing credit growth to owner-occupiers has picked up, with strong demand from first-home buyers. In contrast, investor credit growth remains subdued. Given the environment of rising housing prices and low interest rates, the Bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained,” Governor Philip Lowe said.

While Lowe said the economy has improved greatly since last year, he acknowledged there is still a long way to go.

“The economy is operating with considerable spare capacity and unemployment is still too high. It will take some time to reduce this spare capacity and for the labour market to be tight enough to generate wage increases that are consistent with achieving the inflation target.”

What Lowe left unsaid is that the RBA is stuck in a holding pattern, unsure of what the aftermath of JobKeeper will look like.

After providing 12 months worth of support to businesses and workers, the wage subsidy ended last week with fears that its termination could cost more than 110,000 jobs.

While its Tuesday meeting is the RBA’s first since JobKeeper ended, it will be another three weeks before payroll data provides the first indication of the carnage and almost six weeks until the first official jobs figures drop that account for its removal.

It means for the next month and a half, Australia is simply sailing blind, unsure of what shape the economy is actually in. While a recovery seems to be underway, it’s unknown how much of that was being supported by public money and if jobs progress can be maintained through this transition period.

“There are still significant parts of the economy being left behind despite overall improving conditions. If we can sustain an improvement in unemployment rates and the broader labour market, we will be well on our way to a full-blown recovery,” CreditorWatch chief economist Harley Dale said.

“We’re not there yet though and monthly statements from the RBA will likely reflect that fact in coming months.”