Dovish and Hawkish Stance-Monetary Policy

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Features of Hawkish Stance

• A hawk, also known as an inflation hawk, is 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. 
• Hawks are less concerned with economic growth than they are with recessionary pressure brought to bear by high inflation rates.
• High interest rates make borrowing less attractive. As a result, consumers become less likely to make large purchases or take out credit. The lack of spending equates with lowered demand, which helps to keep prices stable and prevent inflation.
• High interest rates carry a great deal of economic advantages. While they make it less likely for people to borrow funds, they make it more likely for them to save money.
• High rates dissipate risk, making banks potentially more likely to approve borrowers with less than perfect credit histories.

Features of Dovish Stance

• A dove is an economic policy advisor who promotes monetary policies that usually involve low-interest rates. 
• Doves tend to support low-interest rates and an expansionary monetary policy because they value indicators like low unemployment over keeping inflation low.
• If an economist suggests that inflation has few negative effects or calls for quantitative easing, then he or she is often called a dove or labeled as dovish.
• Critics argue that a dovish monetary policy left unchecked could overheat an economy and result in runaway inflation.
• When consumers are in a low-interest rate environment created through a dovish monetary policy, they become more likely to take out mortgages, car loans, and credit cards.
• This flurry of spending affects the entire economy. Increased consumption can help create or support jobs, which is often one of the main concerns of the political system from both a taxation and a happy voter perspective.

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