What is Hawkish and Dovish in Forex Market?

6/06/2020 10:46:00 PM
Sometimes u heard that "The central bank governor came out slightly hawkish today after strong economic data" Or "Slightly dovish after strong economic recession". These two words are mainly used to determine Monetary Policy.

Hawkish

The Hawkish term used in Monetary Policy when central bank think that there economy doing great and they need to increase interest rates to fight inflation. It also used to describe contractionary monetary policy. Simply means that's word good for the currency.

Some of the words that can be used to describe the monetary policy include:
  • Inflation increasing
  • Strong economic growth
  • Reducing the balance sheet
  • Tightening of monetary policy
  • Interest rate hikes

Dovish

The Dovish term used in Monetary Policy when central bank think that there economy in recession and they need to cut interest rates, expect inflation to decrease or become deflation or increasing quantitative easing to stimulate the economy. Simply means that's word not Good for the currency.

Some of the words that can be used to describe the monetary policy include:
  • Inflation decreasing/deflation (negative inflation)
  • Weak economic growth or in recession
  • Increasing the balance sheet
  • Loosening of monetary policy
  • Interest rate cuts
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