RBA to hold rates, watch housing market

The Reserve Bank of Australia is set to hold its benchmark interest rate steady for a ninth consecutive month to keep downward pressure on household debt and as inflation creeps back into its target band.

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All 12 economists surveyed by AAP expect the RBA to leave the cash rate steady at a record low of 1.5 per cent at its May board meeting on Tuesday.

The last time the central bank shifted its benchmark rate was back in August last year as it tried to boost sluggish inflation.

Capital Economics chief economist Paul Dales said headline consumer price growth was 2.1 per cent in the year to March 31, returning to the RBA’s two to three per cent target band for the first time in more than two years.

He said underlying inflation, which cuts out volatile price movements had also bumped up to 1.8 per cent annually, compared to 1.5 per cent in the year to the December quarter.

“It’s not at the extremely low levels that we thought would force the RBA to put aside its remaining financial stability concerns and cut interest rates further,” he said.

Commonwealth Bank chief economist Michael Blythe said the RBA was now focusing on the housing market and would not risk further inflaming prices with another rate cut.

RBA governor Philip Lowe is due to speak at a business lunch on Thursday and the title of his speech – “Household Debt, Housing Prices and Resilience” shows where the central bank’s focus is at present, Mr Blythe said.

“A central bank Governor concerned about the high levels of household debt, overly rapid growth in house prices and the potential threat to the economy and financial system does not want to cut interest rates,” he said.

Mr Dales said the only factor that could possibly prompt the RBA to cut rates again would be a deterioration of the labour market where the unemployment rate rose above the peak of 6.3 per cent recorded in 2015.

Both economists agreed that the Reserve Bank would not consider raising rates until sometime in 2018.

The Reserve Bank will announce its interest rate decision at 1430 AEST on Tuesday.

Turnbull stumped by Qld premier’s attack

Prime Minister Malcolm Turnbull says he can’t understand why the Queensland premier launched such a savage, public attack against him.

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“I am at a loss to understand why she chose to, you know, use such personal and bitter language about me. It was uncalled for, it was unnecessary, it had no basis in fact,” Mr Turnbull told reporters in Townsville on Monday.

He said he won’t get into a slanging match with Annastacia Palaszczuk, who on Sunday called him arrogant, disrespectful, and a worse prime minister than Tony Abbott.

The premier said her frustration started to mount after Cyclone Debbie and reached a tipping point during a recent slanging match with Deputy Prime Minister Barnaby Joyce over Category C disaster relief funding.

She also pointed to the lack of respect she says Mr Turnbull showed, when he flew to Queensland recently for a major gas announcement, without bothering to tell her.

Mr Turnbull told reporters her comments left him confused, especially after the joint effort to help people after the cyclone.

“The remarks she made are so incongruous or hard to understand or explain,” he said.

“They come barely a month after she thanked the federal government … for the unprecedented co-operation between the federal government and the state government agencies for tropical cyclone Debbie.”‘

Mr Turnbull also pointed out that his government was shouldering 75 per cent of the costs associated with the natural disaster.

“I am not going to let personal attacks like that get in the way of my or my government’s commitment to the people of Queensland,” the prime minister said.

The federal government was investing billions in infrastructure across the state, including $100 million towards a new sports stadium for the North Queensland Cowboys in Townsville, he said.

Construction and mining company Watpac will build the new stadium, with the Queensland government contributing $140 million.

Shoe merchant RCG booted for downgrade

The Athlete’s Foot owner RCG has been savaged by investors after the shoe merchant cut its annual earnings forecast, blaming a widespread sell-down of retail stocks for the recent drop in its share price.

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RCG shares plunged 27.1 per cent on Monday, hitting a two-and-a-half-year low following the disappointing trading update that cut the group’s full-year earnings guidance for a second time this year.

The shoe retailer says housing market concerns, subdued wage growth and the pending arrival of Amazon have made investors nervous about the retail sector.

“The board believes that RCG has been caught up in the widespread sell-down of retail stocks over the last few months due to a number of factors,” the company said in its trading update released to the ASX on Monday.

It said those factors included declining consumer confidence, weak wage growth, housing market concerns, rising interest rates and the “perceived impact that the market entry of Amazon may have on the Australian retail landscape”.

The company said it wanted people to note that its directors have a combined 30 per cent stake in RCG.

RCG’s share price began the year around $1.49 and was at 83 cents by the end of April – a 44 per cent slide in four months before Monday’s plunge.

The company also reassured the market that the former owners of its Accent business, which houses Platypus, Vans and Dr.Martens, will not sell their shares when their escrow expires on May 27.

“Those former owners who are directors of RCG have confirmed that they have no intention of selling shares into the market at these levels,” it said.

RCG expects earnings before interest, taxes, depreciation and amortisation (EBITDA) to be in the range of $74 million to $80 million for 2016/17, down from its February guidance of $85 million to $88 million.

The company attributed the downgrade to softer shoe sales, including flat like-for-like sales during March and April for its Accent and Hype businesses, and flat like-for-like sales for the year to date at The Athlete’s Foot.

It also defended the integration of its bricks and mortar stores with its online outlets across its TAF, Platypus, Hype, Skechers, Vans, Merrell, Saucony and CAT brands.

It said eCommerce sales had risen more than 65 per cent and the growth continued to accelerate.

Shares in RCG ended at 60.5 cents, down 22.5 cents with more than 30 million units having been traded.

Fittler pushed hard to pick City side

Brad Fittler was on his phone until 11pm on Sunday night trying to find 17 players available to represent City Origin against Country one last time.

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And even when his phone ran out of battery, his search wasn’t complete.

The representative availability crisis hit a new low on Monday morning, when Fittler was forced to delay naming his team due to the high amount of withdrawals.

Canberra and North Queensland had banned their players from selection, blaming player welfare, while Canterbury coach Des Hasler allowed only Adam Elliott to be named for Country.

“I always knew it was going to be like this from the moment Canterbury made their intentions clear,” Fittler said.

“I can’t control how they feel about the game or how they act allowing their players to be eligible.”

Eventually, when it was resolved, Jake Marketo was pulled from Illawarra’s NSW Cup side to be selected.

Marketo has been named in the Dragons’ 21-man squad just once this year – and that was in round one.

He was on his couch in Wollongong when he found out on Monday morning and initially thought the phone call from Fittler was a joke.

Penrith duo Nathan Cleary and James Tamou were in the Panthers’ gym together, before they found out they had to pack their bags and rush down the M4 to join the squad at about 10am.

“Getting James Tamou – that was someone I was on the phone about until late last night,” Fittler said.

“He was someone who people could feel could do with the week off but the situation of him putting his hand up to want to play and the club allowing him to play was a big coup.

“Once I had he and (Paul) Gallen up front I was happy to put anyone behind them.”

Those behind him include Parramatta’s David Gower – who has spent all but two games this year as the Eels’ 18th man or in reserve grade – and Hame Sele, who has played just four games off the bench for the Dragons.

The availability crisis also forced Fittler to name Panthers utility Bryce Cartwright at five-eighth, denying Matt Moylan a trial in the halves ahead of NSW State of Origin selection.

He is one of the few players pushing his Blues’ hopes as it’s understood potential hooking candidates for NSW, Nathan Peats and Peter Wallace, were also unavailable.

That allowed in-ford Dragons hooker Cameron McInness to be named in the No.9 jersey while Chad Townsend will start at halfback.

City: Matt Moylan, Clinton Gutherson, Nathan Ross, Tyrone Peachey, Josh Addo-Carr, Bryce Cartwright, Chad Townsend, James Tamou, Cameron McInnes, Paul Gallen, Curtis Sironen, David Gower, Hame Sele. Bench: Joseph Paulo, Nathan Cleary, Pauli Pauli, Jake Marketo.

‘Men gave teen gun to kill Curtis Cheng’, court hears

As he left a Parramatta mosque on his way to shoot police accountant Curtis Cheng, teenager Farhad Jabar turned to a security camera and raised his index finger in the distinctive Islamic State salute.

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Prosecutors are using CCTV footage of Jabar’s chilling gesture and a bloodstained extremist note in which he’d threatened to turn “your days into hell” as evidence in the case against three men accused of aiding Mr Cheng’s 2015 murder.

Talal Alameddine, 24, Mustafa Dirani, 23, and Milad Atai, 21, faced the first day of a committal hearing in the Downing Centre Local Court on Monday.

All three are charged with doing an act in preparation for a terrorist act, while Alameddine and Dirani are charged with supplying the revolver used to shoot Mr Cheng outside Parramatta police headquarters.

A fourth man, 19-year-old Raban Alou, has also been charged over the plot but is not involved in the committal proceedings.

Crown prosecutor Paul McGuire SC told the court a bloodstained note found on 15-year-old Jabar’s body was clearly a reference to Mr Cheng’s shooting being “an act designed to cause terror and designed to achieve some religious motivation or end”.

“Know that you are all being watched 24/7, while you are asleep, awake, planning,” the note says in part.

“But soon by the will of God the Exalted, your nights will turn into nightmares, your days into hell.”

Mr McGuire said Islamic State had taken credit for Mr Cheng’s shooting, with its online magazine Dabiq referring to Jabar as “amongst the brave knights” of jihad who “struck the crusaders of Australia and killed one of their personnel”.

He said the accused men had referred to the Dabiq article in conversations on the WhatsApp messaging platform and had also discussed international terror attacks, and cursed Australian Defence Force personnel.

Aerial police surveillance footage was played to the court of Alameddine allegedly meeting Alou and Dirani at a western Sydney park to hand over a firearm just hours before Mr Cheng was shot.

Forty-five minutes before the shooting, Alou can be seen entering the Parramatta mosque, allegedly concealing the .38 calibre Smith & Wesson revolver used to shoot Mr Cheng.

It was at the mosque that Jabar allegedly took possession of the weapon, prosecutors say.

CCTV footage played in court on Monday shows the teenager prayed before he left the mosque on foot wearing dark robes and carrying a backpack, bound for the Parramatta police headquarters where Mr Cheng worked.

Jabar was shot dead by police in an exchange of gunfire shortly after he shot Mr Cheng.

There was a heavy police presence in court for Monday’s hearing and the three accused men sat in a dock behind a clear panel.

Dirani and Atai smiled at three young male supporters who sat in the public gallery. A woman wearing a niqab was also in the public gallery.

The committal hearing continues.