Hawkish

The word is an adjective applied to a stance, a speech, a set of minutes, a vote or a projection, and its opposite is dovish. A hawk weighs the risk of inflation above the risk of weak growth and unemployment, and the policy that follows from that weighting is a higher policy rate, an earlier rise, a slower pace of cuts or a faster reduction of a balance sheet.

The label is read out of language and evidence rather than measured: the wording of a statement compared with the previous one, the split of a vote, the direction of published projections, the emphasis in a press conference. Some desks score statements by counting words associated with each stance, a method other desks regard as a summary of tone rather than of intent.

The point most often missed is that the label is relative to expectation, not to the level of rates. A rate decision that raises rates is routinely described as dovish when a larger rise or a firmer signal had been expected, because what moved was the gap between the announcement and what was already priced. Both labels are also short-lived. A committee described as hawkish in one quarter is described as dovish in the next on the same underlying preferences, once the data around it has changed.