RBA Assistant Governor: Rate cuts have taken account of the expected evolution of the housing cycle

Guy Debelle, Assistant Governor (Financial Markets) at the Reserve Bank of Australia  is speaking on “Housing and the Economy” in Sydney and has said  a sizeable downturn in home building is underway.

Additional comments:

Says home construction turned down sooner, by more than we expected.
Says much of the downturn in construction activity is still ahead.
Downturn will directly subtract around 1% point from gdp growth from peak to trough.
Says effect of downturn will be somewhat larger on the economy as a whole.
Says downturn dragged on small business incomes, household wealth.
Together accounted for much of the slowdown in consumption growth.
2020 looks like being the low year for residential construction sector.
"we can see through the trough to the other side" of the downturn.
Home prices have turned in melbourne and sydney, investors returning to market.
Rate cuts have taken account of the expected evolution of the housing cycle.
Says likely to see more muted pick-up in home lending than in the past.

About Debelle

Guy Debelle is the Assistant Governor (Financial Markets) at the Reserve Bank of Australia, a position he has held since March 2007. In that role, he has oversight of the Bank's operations in the domestic and global financial markets, including the management of Australia's foreign reserves. He briefs the Reserve Bank Board on developments in financial markets at the monthly Board meetings and participates as the Bank's representative in a number of global fora, including the BIS Committee on Global Financial Stability.

FX implications

AUD/USD has been taken for a ride of late due to US/China trade war headlines as well as sentiment surrounding the RBA and their next move. 

"Markets are pricing 10bp of easing at the 5 Nov RBA meeting, and a terminal rate of 0.44% (RBA cash rate currently at 0.75%)," analysts at Westpac explained