Loading The central bank has shifted its focus from the 2 to 3 per cent inflation target towards getting the unemployment rate down to 4.5 per cent in the hope of stimulating wages growth and sluggish household consumption. It conceded the current economic indicators made that unlikely. "Forward-looking indicators of labour demand pointed to a moderation in employment growth in the near term, to around the rate of growth in the working-age population," the minutes said. "In assessing whether further monetary easing was appropriate, developments in the labour market would be particularly important." It urged the government to do more as it runs out of wriggle room to cut interest rates further if economic circumstances do not improve.

"The [board] also recognised, however, that lower interest rates were not the only policy option available to assist in lowering the rate of unemployment, consistent with the medium-term inflation target," the minutes said. The board said tax cuts that have yet to be passed by Parliament, worth $1080 for most workers and scheduled to begin in July, would boost household disposable income and could support household consumption in the second half of 2019. House price figures from the Australian Bureau of Statistics released on Tuesday also highlighted the economic headwinds facing the country. The bureau said house prices fell in every capital city with the biggest falls in Sydney (3.9 per cent) and Melbourne (3.8 per cent) through the March quarter.

Loading Over the past year, prices in Sydney have fallen by 10.3 per cent while in Melbourne they are down by 9.4 per cent. Hobart (up by 4.6 per cent) is the only capital where prices have lifted by more than the inflation rate over the past 12 months. The bureau noted the fall in prices is hitting the overall value of the nation's housing stock. The value of all housing fell by $173 billion in the quarter, the single largest drop in value for figures that go back to 2011. Houses in NSW shed $96 billion in value while in Victoria they lost $61 billion.

Over the past year, $393 billion has been wiped from the value of the nation's housing stock. It is now below $6.6 trillion, in line with where it was in December 2016. The head of the bank's financial stability department, Jonathan Kearns, used an address to a property summit in Canberra on Tuesday morning to release data showing the number of people in arrears on their home loans had now reached the level recorded during the global financial crisis. Mr Kearns said although the proportion of people behind was still low at just on 1 per cent of all loans, the growth in mortgages in arrears was evidence of broader issues facing the economy. He said while arrears rates were not at a level that posed a "risk to financial stability" or would cause "great harm" to households, they were worth watching closely as they were likely to increase. "Several factors have been interacting to drive the rise in housing arrears. Economic conditions are undoubtedly part of the story," he said.

Loading "Weak income growth, housing price falls and rising unemployment in some areas have all contributed. But they have not acted alone, interacting with earlier weaker lending standards, and the more recent tightening in lending standards." The RBA said the housing market was likely to pick up after the election. Labor had proposed billions of dollars in changes to negative gearing and capital gains tax. "Members noted that the housing market was likely to be affected by the removal of uncertainty around possible changes to taxation arrangements relating to housing," the minutes said. Internationally, the board remained concerned about ongoing trade disputes between the US and China which had racheted up to a 25 per cent tariff on $US260 billion of imports between both countries.