So it has come to this: The Reserve Bank of Australia is hanging onto its last two air rifle pellets in hope that the weekend’s auction mania continues, pushing us back up to record housing prices – and matching record household debt.

That is Australia’s core policy for stronger economic growth to eventually lower unemployment sometime the year after next.

And it is a matter of RBA hope, not belief.

While the governor’s Tuesday statement repeats the mantra of lower interest rates’ effects and concludes that the “board decided to hold the cash rate steady at this meeting while it continues to monitor developments”, it’s taken for granted that the bank will fire its second-last shot after the next board meeting on February 4. 

If RBA meeting dates were a little more rational and flexible, Tuesday’s meeting would have been delayed a week to consider Wednesday’s national accounts and car sales figures – neither will be good – and Thursday’s retail sales update – likely to be improved but still weak.

But the RBA could well be happy to delay cutting rates again as long as possible. 

RBA governor Philip Lowe is in no rush to keep cutting rates. Photo: AAP

It’s common to talk of the bank running low on ammunition. Now the quality of the ammunition needs assessment as well.

The central bank’s monetary policy “blunt instrument” once envisaged a cudgel to belt the economy in one direction or the other. Now it’s barely a weapon at all of unqualified stimulatory good.

The prospect of the next shot reminds me of a rickety childhood air rifle of unfailing inaccuracy and so little power you could see the pellet in the air on its way to missing the target.

This is where the monetary musclemen shout: “No! There’s unlimited ammunition beyond two more rate cuts – the ‘unconventional policy’ of grenades, bazookas, mortars! Well, QE anyway. The governor told us so!”

Um, no. The governor’s speech last week on unconventional monetary policy was fractionally more subtle than some commentary understood.

Readers of The New Daily saw the message and Ross Gittins of the papers-formerly-known-as-Fairfax got it.

The governor has drawn something of a line in the sand for the government on monetary policy. They may be shifting sands, but the line has been drawn.

“Does Lowe stand back and watch an overconfident leader dice with political death by pretending that monetary policy hasn’t reached the end of its useful life and that blood can still be squeezed from the stone?” asks Gittins.

“Or does he announce he’s done all he sensibly can and turn the economy’s problem back to the one (elected) person who could fix it if he came to his senses?

Conventional monetary policy (interest-rate manipulation) has lost most of its power because household debt is at record levels, because the official interest rate is almost at zero, and because rates are already so low that another few cuts won’t make much difference.”

Barring a financial crisis – not mere rising unemployment and weakening growth – Dr Lowe has signalled those last two air rifle pellets are it. Beyond that, it’s up to Messrs Morrison and Frydenberg.

It threatens to be a long summer of discontent as that message sinks in.

Even the good news – Tuesday’s announcement of a record quarterly trade surplus – is double-edged.

Net exports will add 0.2 percentage points to Wednesday’s September quarter GDP count.

Part of that contribution comes from stronger goods and services exports – good news.

But part comes from reduced imports – not so good news.

The import of capital goods, an indication of business investment, was down 5.6 per cent, which bodes ill for sustainable economic growth down the track.

The import of consumption goods was down 0.5 per cent – perhaps partly thanks to the weaker Australian dollar, but more evidence of Australia’s biggest domestic economic problem: Weak household consumption, thanks to weak growth in real household incomes.

The contribution from net exports and public sector spending is expected to deliver September quarter GDP growth of maybe 0.5 per cent, if Mr Frydenberg is lucky.

Treasurer Josh Frydenberg has to ask himself one question: ‘Do I feel lucky?’ Photo: AAP

But weak consumption remains a drag with no sign of change.

Which is where the housing auction mania is supposed to come to the rescue.

The RBA is relying on surging prices encouraging increased housing turnover and turning around the present fall in building approvals some time next year, with more construction to follow.

It’s the prospect of more work and money for real estate agents and conveyancers and, eventually, building workers that the RBA thinks will do most to lift consumption, rather than the simple ‘wealth effect’ of people with homes feeling richer and therefore spending more.

It’s a big bet when the RBA’s deputy governor also has told us to expect wages growth to remain where it is for years to come – pretty much stagnant after inflation and tax.

That means most people will not feel any increase in living standards whatever the GDP number might be.

Occasionally that old air rifle would hit something, not necessarily what was aimed at and not hard enough to put a hole in it, but it could hit something.