Dovish vs Hawkish Economic Policy – What Does That mean

Dovish vs Hawkish Economic Policy – What Does That mean

I wanted to talk about another concept around the Fed and around economists. It’s two terms that are used commonly around economic policy, and those are dove and hawk. And I want to talk a little bit about what those mean, because you might have seen these in articles that are written and it took me a while to wrap my head around what these two terms means.

I just wanted to give you the 32nd overview of what this means. Right now with the Fed hiking rates like they are, that is a hawkish type stance. What hawkish means is it’s a policy where they’re trying to slow down the economy.

They’re being aggressive towards slowing down the economy, to doing things that are less accommodative, things that are going to restrict the money flow and make it more expensive to borrow.

A dovish stance is a policy that eases things up and makes credit flow more easily, that heats up the economy more. What we saw right after COVID, for example, was an extremely dovish stance and that’s what they continued with over the course of the last couple of years.

Recently, over the last four or five months, the Fed has turned into more of a hawkish, or not more of it, they’ve turned into a hawkish stance, which means they’re being more aggressive towards slowing down money flow, slowing down the velocity of money, which I talked about a couple of weeks ago and slowing down the economy.

I hope that helps you out if you were curious what dovish and hawkish means in regards to economic policy in the Federal Reserve. And as usual, call me if you have any mortgage related questions, and have a great rest of your day.