Hawkish and dovish: definition

Hawks and doves

A “hawkish” central banker prioritises fighting inflation and leans towards higher rates, or keeping them high for longer. A “dovish” banker worries more about growth and employment and leans towards lower rates.

The term applies to a person, a statement, a decision or a figure. Higher-than-expected inflation is “hawkish” data because it brings a rate hike closer.

A relative tone, not an absolute one

A decision is only hawkish or dovish relative to what the market expected. A rate cut can be hawkish if the bank hints that it is stopping there when a series was expected. This is called a “hawkish cut”.

The tone shows in the details: the vote split, words added to or removed from the statement, inflation projections revised up or down, the chair's answers at the press conference.

The effect on a currency

A more hawkish tone than expected generally supports the currency, because it raises the expected return on investments denominated in it. A more dovish tone weighs on it. The move first runs through two-year rates, the most sensitive to monetary policy expectations, before reaching the currency.

Frequently asked questions

What does “hawkish” mean in French?

“Restrictif”, or “faucon”. The opposite, dovish, translates as “accommodant”, or “colombe”.

How can I tell if a Fed member is hawkish?

From their past votes, their speeches and their position in the dot plot: a participant who places their dot above the median is more hawkish than the committee.