The Reserve Bank of Australia (RBA) will likely keep its cash rate steady at 4.35% in August and through the remainder of 2026 amid softer inflation and weakness in the jobs and housing markets, Commonwealth Bank of Australia said in a Thursday report.

"Currently there is little need to tighten further given the combination of data prints since June and our forecasts for the remainder of 2026," said CommBank Head of Australian Economics Belinda Allen.

The forecast follows Australia's consumer price index rising 3.8% in the 12 months to June, decelerating from a 4% increase in the previous month and coming in below expectations.

Meanwhile, the country's jobless rate stands at 4.4%, above the central bank's 4.2% forecast for the June quarter, and a broader measure of spare capacity in the jobs market is at its highest level since December 2021.

CommBank forecasts two rate cuts in 2027, one each in May and August, and also warned of a potential rate increase in November this year if prices start rising faster again and growth does not slow as expected.