A recession is a lack of investment by businesses. It is caused by a lag effect with interest rate increases. A rate increase takes time to effect the economy so the RBA increases the rates again and still no effect so it raises the rates again and sees little effect. Then suddenly the 7th previous Rate increase takes effect and the economy stalls and the RBA decreases the rates. However it takes time for a rate cut to take effect on the economy so we suffer a recession. To increase interest rates the RBA takes money out of the economy by selling bonds. This lack of money makes it harder to borrow money as there is less in the economy and also effects businesses from expanding as they find it harder to borrow money. 
