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always watching economic news very closely in our Live Trade Room and we often
hear the term ‘dove’
and ‘hawk’ used to
describe a member of the Fed committee as they discuss their views on economic policy.
What do these terms mean, and how can
we use them to profit in our Live Trade Room?
An economic policy advisor who promotes monetary policies
that involve the maintenance of low interest rates, believing that inflation
and its negative effects will have a minimal impact on society. This term is
derived from the docile and placid nature of the bird of the same name, and is
the opposite of the term "hawk".
that suggest that inflation will have a minimal impact are called
A policymaker or advisor who is predominantly concerned with
interest rates as they relate to fiscal policy. A hawk generally favors
relatively high interest rates in order to keep inflation in check. In other
words, they are less concerned with economic growth than they are with
recessionary pressure brought to bear by high inflation rates.