The Reserve Bank of Australia decided to keep the cash rate on hold at 1% despite indications of a slowing economy.

In its statement, the central bank revised its previous references to GDP growing by 2.5% this year and 2.75% in 2020. It now projects the economic growth to be in line with the "trend over the next couple of years".

"Economic growth in Australia over the first half of this year has been lower than earlier expected, with household consumption weighed down by a protracted period of low income growth and declining housing prices and turnover," RBA Governor Philip Lowe said in a statement.

However, Lowe noted of the signs of a turnaround in established housing markets, particularly in Sydney and Melbourne.

RBA watching closely

It appears like the central bank is taking a “wait and see” approach when it comes to monetary policy decisions, AMP Capital economist Shane Oliver told ABC News.

Oliver said the RBA is trying to watch out for the impact of the recent back-to-back rate cuts and the federal government's tax cuts for low- and middle-income earners.

Also read: Big Bank Forecasts "Multiple Rate Cuts"

"However, while these will help avoid recession, we doubt that they will be enough to generate decent growth, and the evidence from July is not that encouraging," he said.

With where things are currently going, Oliver said more rate cuts would come as the housing rebound could potentially result in another price bubble.

"While the rebound in the Sydney and Melbourne property markets could present a problem for the RBA in terms of cutting rates further, the RBA will likely do what it believes is right for the 'average' of Australia rather two cities' property markets," he said, "But it may have to resort to tighter regulatory controls again if it needs to cool the Sydney and Melbourne property markets once more for financial stability reasons."