The Reserve Bank of Australia (RBA) Tuesday raised interest rates 25 basis points to 3.75 percent to choke off inflationary pressure as the economy gains momentum.
It was the third month in a row that the RBA has hiked rates by one-quarter of 1 percent.
"Despite the volatility in financial markets in the past week or so, the domestic economy is doing exceptionally well," ANZ bank chief economist Warren Hogan said.
"All the economic data we've seen in the past month has not only reinforced that but probably been stronger than most were expecting."
The RBA will not meet in January and many analysts are predicting another rate rise at its next meeting in February.
Unions have warned that a third successive interest rate rise will put jobs at risk by raising the cost of borrowing.
"A third successive rate rise could halt emerging signs of an economic recovery and put jobs at risk by increasing borrowing costs for small business," Australian Council of Trade Unions president Sharan Burrow said.
"Businesses are still struggling to hire and the central bank should be cautious about inflicting more financial pressure on families and businesses," Burrow added.