"The main domestic uncertainty remains around the outlook for household spending and the effect of falling housing prices in some cities," he said.

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"GDP growth in the September quarter was weaker than expected. This was largely due to slow growth in household consumption and income."

Steady labour market conditions and an unemployment rate falling towards 5 per cent give cause for optimism but retail sales released on Tuesday showed a 0.4 per cent fall in sales through the key Christmas shopping period. Sales have not been helped by wages going nowhere fast, with growth remaining well below historic norms at 2.3 per cent.

Dr Lowe said the stronger labour market had led to some pick-up in wages growth, "which is a welcome development".

"The improvement in the labour market should see some further lift in wages growth over time, although this is still expected to be a gradual process," he said.

The figures will be of concern to Treasurer Josh Frydenberg, who is preparing to face his final set of national accounts in March before April's budget. Household spending accounts for up to 60 per cent of economic growth and will impact the budget forecasts as the Coalition and Labor head into the May election.

CoreLogic head of research Tim Lawless said the RBA looked past the housing downturn to hold the cash rate firm at its first meeting of the year.

Sydney’s median house price fell 9.9 per cent in 2018, according to the Domain House Price Report, while Melbourne’s median house price was down more than 8 per cent.

"There is the potential the RBA may be becoming less comfortable with the performance of the housing sector," Mr Lawless said.

"Add to this a consistent downtrend in dwelling approvals, weakening consumer sentiment and softer retail trade figures, and it looks like the household sector could start to weigh down economic growth."

The RBA board said the low level of interest rates was continuing to support the Australian economy. Further progress in reducing unemployment and having inflation return to target was expected, although this progress was likely to be gradual.

"Taking account of the available information, the board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time."

The Australian dollar rose after the RBA decision, buying 72.39 US cents at 2.36pm, compared with 72.09 before the report.