Glossary

Hawk/hawkish

Hawkish is a term used in economics to describe a monetary policy that takes rigorous steps to control inflation, principally by means of raising interest rates. An inflation hawk will be less concerned with economic growth than they with reducing the likelihood of a recession.

Although hawkish individuals are often viewed negatively, as high interest rates reducing borrowing and investments, the monetary policies often encourage saving and can lead to imported goods becoming cheaper.

Hawks vs doves in monetary policy

While the hawks favour a more stringent monetary policy and higher interest rates in order to control inflation, the doves are more in favour of keeping interest rates low and giving businesses easier access to loans for expansion.

Dovish policy makers believe that low interest rates, even in an inflationary environment, will help boost demand, employment levels and increase supply so that inflation is kept in check. Whether hawks or doves are in control will largely depend on the state of the economy. In fact, even individuals have been known to switch from being a hawk to a dove during their tenure as monetary policy makers.

For example, Ben Bernanke, the Federal Reserve Chair from 2006-2014, was known for alternating in his tendencies.

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