You may have been hearing a lot about them recently. Someone is “hawkish.” Another is “dovish.” What does this mean? These are labels used to describe the economic views of policymakers at the Federal Reserve.
Here’s a simple explanation.
The doves believe in using low interest rates to encourage growth in the economy and consumer spending. The doves say the negative effects of super low rates are negligible in the bigger scheme of things.
The hawks disagree. They favor high rates to keep inflation in check. They are concerned that low interest rates, especially for long periods of time, create inflationary pressures that could be harmful to the economy.
Right now there’s a heated debate between the hawks and the doves on the Fed. Does the economy still need stimulus? When should the central bank cut back on its massive bond buying program. But there’s no consensus on when. The hawks want to do it now. The doves say it’s too soon arguing that the economy needs to get stronger and the job market needs to improve.
Currently, there are more doves than hawks among the Fed’s voting members. How they vote on these issues at the remaining five policy meetings this year will shape what happens in the stock and bond markets, mortgage rates and savings rates.
So who are they? Here’s a scorecard:
Chairman Ben Bernanke
Bill Dudley, Vice Chairman and President of the New York Fed
Elizabeth Duke, Board of Governors
Charles Evans, President, Chicago Fed
Jerome Powell, Board of Governors
Sarah Raskin, Board of Governors
Eric Rosengren, President, Boston Fed
Jeremy Stein, Board of Governors
Daniel Tarullo, Board of Governors
Janet Yellen, Vice Chair, Board of Governors
James Bullard, President, St. Louis Fed
Esther George, President, Kansas City Fed
There are eight additional Fed bank presidents who attend the policy meetings, but do not vote this year. They rotate every year. Some of them are outspoken hawks like Richard Fisher (Dallas Fed), Charles Plosser (Philly Fed) and Jeffery Lacker (Richmond Fed).
So from now on when you hear the speeches and quotes from Fed officials about how the economy is doing, keep in mind whether they are doves or hawks. It makes a difference.