rates rising, RBA confident of bumper Christmas,

There is always a great deal of discussion about consumer confidence going into Christmas. It is a busy time of year for travel, tourism, retail, groceries, etc. In October businesses, government and households were holding their breath leading into this busy spending period - mostly hoping for continued low interest rates, ie. cheap money, easy money. However, the reality is that easy money is easily spent and as such the money flowing through the economy is starting to speed up again. As money speeds up, businesses need to hire more labour. As labour demand increases the RBA is moved to act, in this case rase rates early so that the economy doesn't bounce back too hard, so it raises interest rates, ie. tightening the money supply, effectively making money (borrowed money) more expensive.

There is caution because of what economies have just come through in the last year or so, note this article in response to recent interest rate rises (october): http://www.theaustralian.com.au/business/news/rba-rate-rise-premature-says-anz-chief-mike-smith/story-e6frg90f-1225792367182
But despite the recent interest rate rises this is what we have just found out, in fact will lead to more rate rises(december): http://www.theaustralian.com.au/business/markets/fall-in-unemployment-rate-fuels-case-for-rba-to-lift-rates-in-february/story-e6frg926-1225809074692

There are a range of mechanisms for fine tuning our economy so that it doesn't grow to quickly - overheat; cause price instability; inflation - or too slowly - recession; unemployment; stagnation - quite a difficult balancing act. It is interesting stuff to learn more about, to watch the RBA in action as they attempt to create conditions which favour long run growth and price stability, it is also very interesting watching people squirm as rates move - there'll be more discussion on this. In the meantime, enjoy the bumper Christmas spend and get swept up in the event. Whilst your doing it, make sure your doing it on debit.