Reserve Bank governor Philip Lowe says a deteriorating global economy will make it hard for Australia to achieve a “soft landing”, but he will not be deterred from raising the cash rate further amid concern businesses are passing on bigger cost increases.

Money markets reacted to his testimony to a parliamentary committee on Friday, increasing to 61 per cent the chance of another super-sized 0.5 of a percentage point cash rate rise next month, up from 48 per cent before he spoke.