What does it mean when the Federal Reserve is hawkish? What about dovish? Here’s a breakdown of what those terms mean.
So doves and hawks aren’t reserved only for birds.
They can also refer to stances taken by a central bank, or the Federal Reserve.
Being hawkish is when the Fed is guarding against excessive inflation.
This means that the Fed is either raising rates, or that they’re considering it.
Dovish, on the other hand, is basically the opposite of hawkish.
It means that the Fed–or central bank–is less worried about inflation and more worried about weak growth, high unemployment, or even deflation–the opposite of inflation–because the economy is either growing weakly or even contracting.
And how do you stimulate an economy that’s not growing? Well, the Fed tends to lower interest rates.
Need some examples of hawkish versus dovish?
When Janet Yellen was the chair of the Fed, she was largely considered dovish.
On the hawkish side, Alan Greenspan was considered hawkish when he was nominated to the Fed chair in 1987, but became more dovish as time passed.
Jerome Powell, the current Fed chair, has largely been considered hawkish.
Want to know more? Watch the video above.