Why will Australia increase their interest rate only when US increases their interest rate?
Following 1 article, Australia will increase their interest rate only when US increase their interest rate (http://www.smh.com.au/business/markets/currencies/australian-dollar-on-track-to-dip-below-parity-with-new-zealand-20141223-12cxlj.html).Aussie dollar keeps going down and this is not very good for importing business. Why doesn't the Reserve Bank of Australia increase the interest rate right now rather than just waiting for US to increase first. What is the point?
you are on the right track here a depreciating currency tends to reduce imports ( and help domestic companies that compete with imports) and stimulate exports which help foster economic activity. Raising interest rates without the other large players in the world not doing so will hurt these two sectors and reduce economic growth
