HAWKS VERSUS DOVES

Although each central bank official has his or her own specific opinions on how monetary policy should be conducted, all central bankers fall broadly into the following two categories:

HAWKS

Hawk is the term used to describe those central bankers who usually advocate tighter monetary policy in the form of higher interest rates.

DOVES

Dove is a term used to describe those central bankers who usually advocate looser monetary policy in the form of lower interest rates.

However, while central bank officials usually have a consistent historical record of favouring either tighter or looser monetary policy (which usually stems from them representing economies which either favour lower inflation or lower unemployment), this can change due to circumstances. Once again, this presents lucrative trading opportunities to those traders who are well-versed on central bank personnel, and their previous voting records.