What does a hawkish or dovish central bank tone mean?

You have probably heard a financial news presenter say something along the lines of “The central bank governor came out slightly hawkish today after bouts of strong economic data”. The terms Hawkish and Dovish refer to whether central banks are more likely to tighten (hawkish) or accommodate (dovish) their monetary policy.


The term hawkish is used to describe contractionary monetary policy. Central bankers can be said to be hawkish if they talk about tightening monetary policy by increasing interest rates or reducing the central bank’s balance sheet. A monetary policy stance is said to be hawkish if it forecasts future interest rate increases. Central bankers can also be said to be hawkish when they are positive about the economic growth outlook and expect inflation to increase

Some words that could be used describing a hawkish monetary policy include:

  • Strong economic growth
  • Inflation increasing
  • Reducing the balance sheet
  • Tightening of monetary policy
  • Interest rate hikes


Dovish refers to the opposite. When central bankers are talking about reducing interest rates or increasing quantitative easing to stimulate the economy they are said to be dovish. If central bankers are pessimistic about economic growth and expect inflation to decrease or become deflation and they signal this to the market through their projections or forward guidance, they are said to be dovish about the economy.

Some words that could be used to describe a dovish monetary policy, include:

  • Weak economic growth
  • Inflation decreasing/deflation (negative inflation)
  • Increasing the balance sheet
  • Loosening of monetary policy
  • Interest rate cuts

A slight shift in tone from a central banker could have drastic consequences on markets especially Currency, Bonds, and Gold. Traders often monitor Federal Open Market Committee meetings and minutes to look for slight changes in language that could suggest further rate hikes or cuts and attempt to take advantage of this. The hawkish tone of the Central bank is generally considered to be negative for precious metals, while the dovish tone is considered to be positive for precious metals.

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