The Reserve Bank of Australia is set to start a fresh round of monetary easing in August, followed by further cuts in November, February 2026, and May 2026, Westpac (ASX:WBC, NZE:WBC) said Friday.

The monetary policy board's split decision to hold rates steady at the July meeting was a "difference of timing, not direction," with the majority preferring to wait for confirmation from quarterly consumer price data that the disinflation trend was intact, the report said.

While inflation remains near the top of the RBA's target range of 2% to 3%, tight labor markets and weak productivity continue to pose upside risks, the report added.

The bank noted that Australia's tentative growth recovery has stalled in the first half of the year, as private demand remains subdued despite past tax and rate cuts, and public sector spending is slowing.

Westpac said the labor market remains a key barometer of the economy's strength and balance, with May data showing stable unemployment and strong gains in hours worked.

Public sector-driven growth in Australia has created a large number of jobs, while the recovery in private demand is expected to be less "job-rich," Westpac highlighted.

Upcoming data in August and September will provide the real picture of the economy, the bank added.