Raising rates before critical Christmas period a risky decision

The Region's largest business organisation, Illawarra Business Chamber, said the historic decision by the Reserve Bank to raise interest rates for a third consecutive time would place additional pressure on Australia's 750,000 small business owners during the critical Christmas period.

The RBA is making a risky play increasing interest rates for the third time on the trot in the lead up to Christmas - a time that is vital to the economy and long term economic recovery from the GFC.

While the Australian economy has fared better than other world economies, we have not been immune to the effects of the GFC. Increasing interest rates too quickly could hurt confidence and hamper the speed of recovery. Small business owners have got the short end of the stick when it comes to interest rates.

The banks have withheld the interest rate cuts to small business and at the same time they tightened credit making it difficult for small business to get through the GFC. "Small business is now getting squeezed again as interest rates rise and the banks pass on the increases in full to their small business customers.

Both the RBA and the banks need to give small business owners some breathing room before we return to a business as usual interest rate setting.