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Shock to ‘force’ RBA to cut interest rates further than expected: ‘More aggressive’

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Shock to ‘force’ RBA to cut interest rates further than expected: ‘More aggressive’
The RBA is expected to cut the cash rate further this year, with KPMG adding one more cut to its forecast. · Source: AAP

The Reserve Bank of Australia (RBA) could be pushed to take a “more aggressive” rate-cutting approach following the conflict in the Middle East and the potential oil price shock. Some analysts now expect the central bank could cut interest rates a further three times this year.

KPMG has estimated the conflict in the Middle East could shave between 0.15 and 0.20 per cent of the GDP from the Australian economy this year, should the world oil market react in a similar way to how it responded to the first Iraq War. It said an “oil shock” combined with the continuing threat of a global tariff fallout could “force” the RBA’s hand.

“The longer an oil price shock is sustained, the worse its impact is in terms of inflation outcomes, inflation expectations and short-term growth,” KPMG said.

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“This is because oil price shocks can be particularly damaging to an economy like Australia’s as the road transport sector — one of the heaviest users of oil in our economy — touches every single other sector (including itself) across the country.”

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Global oil prices slid 7.2 per cent on Monday following Iran’s retaliatory missile strike on a US airbase. The Brent crude price fell to around $US70 a barrel. This has eased fears of major supply disruptions, but markets remain cautious as tensions continue.

KPMG said it had revised down its RBA cash rate forecasts and now expects a further three rate cuts this year, one more than its original expectation at the start of 2025, bringing the cash rate down to 3.1 per cent by the end of the year.

It expects the RBA to “look through” any short-term inflationary impact of any oil shock and noted this would be combined with core inflation now looking well entrenched in the target band and overall weakness in the Australian economy.

If the RBA cuts interest rates three times, homeowners could see their repayments drop by $265 a month. That’s based on someone with an average $600,000 loan with 25 years remaining.

Markets have an 86 per cent expectation of an interest rate change at the next RBA meeting in July and are almost fully priced in for three more reductions by the end of the year.

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NAB is the only Big Four bank predicting an interest rate cut next month, with ANZ, Commonwealth Bank and Westpac expecting a cut in August.

Westpac chief economist Luci Ellis said the RBA would be more focused on inflation than the oil price.

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Cheers Financial Taps into AI to Build Credit – Los Angeles Business Journal

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Cheers Financial Taps into AI to Build Credit – Los Angeles Business Journal

A credit-building tool fintech founder Ken Lian built out of personal need just got an artificial intelligence-powered upgrade.

Lian and co-founders Zhen Wang and Qingyi Li recently launched Cheers Financial – a startup run out of Pasadena-based Idealab Inc. which combines fast-tracked credit-building with “immigrant-friendly” onboarding.

“Our mission is really to try to make credit fair to individuals who want to have financial freedom in the U.S.,” Lian said.

After coming to the U.S. as an international student from China in 2008, Lian said he struggled for four years to get a bank’s approval for a credit card. Since 2021, the USC alumnus’ fintech ventures have aimed to break down the hurdles immigrants like him often face in accessing and building credit.

Since its launch in November, Cheers Financial has seen “healthy growth,” Lian said, with thousands using its secured personal loan product to build credit through automated monthly payments. At the end of the 24-month loan period, users get their principal back minus about 12.2% interest.

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“The product is designed to automate the entire flow, so users basically can set and forget it,” Lian said.

Cheers, partnering with Minnesota-based Sunrise Banks, boasts an average 21-point increase in credit scores within a couple of months among its users coming in with “fair” scores from the high 500s to mid-600s.

With help from AI data summary and matching, the company reports to the three major credit bureaus every 15 days – two times as frequent as popular credit-building app Kikoff. Lian hopes to shave that down to seven days.

Cheers is far from Lian, Wang and Li’s first step into alternative financial tools. An earlier venture launched in 2021, Cheese Inc., served a similar goal as an online platform providing credit-building loans alongside other services, including a zero-fee debit card with cash back.

Cheese folded when the company it used as its middle layer, Synapse Financial Technologies, collapsed in April 2024 and locked thousands of users out of their savings.

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For Lian and other fintech founders, Synapse’s fall was a wake-up call to the gaps and risks of digital banking’s status quo. As he geared up for Cheers, Lian knew in-house models and a direct company-to-bank relationship were key.

“That allows us to build a very secure and stable platform for our users,” Lian said.

Despite cooling investment in fintech, Cheers nabbed backing from San Francisco-based Better Tomorrow Ventures’ $140 million fintech fund. Automating base-level processes with AI has given the company a chance to operate at a lower cost, Lian said.

“You don’t need to build everything from the ground up,” Lian said. “You can let AI build the basic part, and then you optimize from that.”

Strong demand from high-quality users who spread the word to friends and relatives has helped, too. Some have even started Cheers accounts before arriving in the U.S., Lian said, to get a head start on building credit.

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How The Narrative Around ConocoPhillips (COP) Is Shifting With New Research And Cash Flow Concerns

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How The Narrative Around ConocoPhillips (COP) Is Shifting With New Research And Cash Flow Concerns
ConocoPhillips’ fair value estimate has been adjusted slightly, moving from about US$112.37 to roughly US$111.48, as recent research blends confidence in the company’s execution and balance sheet with more cautious views on crude pricing and near term cash flow. The core discount rate has been held steady at 6.956%, while modest tweaks to revenue growth assumptions, from 1.92% to 1.69%, reflect tempered expectations around demand and realizations that some firms are flagging. Stay tuned to…
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