Treasurer Wayne Swan says today's interest rate rise is 'tough' for homebuyers and small business.

The Reserve Bank says the quarter of a per cent rise brings borrowing rates back to normal and has hinted it may be the last increase for awhile.
Mr Swan says he knows rate rises are bad news for those with loans

"This is a tough decision for families and for small businesses, unfortunately this is one of the difficult consequences of an economy that is recovering better"

Greg Evans from the Chamber of Commerce and Industry says the Reserve must not raise rates any higher.

"Not all sectors of the economy have rebounded out of the ecomonic down turn, many areas of business inparticular in the services sector, in retail, in tourism."

The Commonwealth Bank is the first of the big four banks to raise its interest rates in line with the Reserve Bank with Westpac quickly following suit.