Hawkish
A monetary policy stance favouring higher interest rates and tighter financial conditions to combat inflation — the opposite of dovish.
A hawkish Fed or central banker prioritises fighting inflation over supporting growth. Hawks believe rates should be higher — or at least not cut — because inflation remains a threat or economic conditions are too hot.
Hawkish rhetoric from the Fed typically causes bond yields to rise (selling pressure as markets price in higher rates for longer) and risk assets to fall (higher discount rates compress equity valuations; tighter credit conditions increase default risk).
Reading the tone of Fed communications as hawkish or dovish — and anticipating shifts in tone — is one of the most actionable skills in macro trading. A single hawkish phrase in a Fed statement can move the 2-year Treasury by 10+ basis points.
Related Terms
Central Bank
A national institution that manages monetary policy, controls money supply, and acts as a lender of last resort to the banking system.
BeginnerCME FedWatch
A CME tool that converts 30-day Fed Funds futures prices into market-implied probabilities of Fed rate moves at upcoming FOMC meetings.
IntermediateDovish
A monetary policy stance favouring lower interest rates and easier financial conditions to support growth and employment — the opposite of hawkish.
IntermediateFederal Funds Rate
The overnight interest rate at which U.S. banks lend reserve balances to each other — the primary policy rate the Fed targets to steer the economy.
IntermediateFederal Reserve
The U.S. central bank — its rate decisions and forward guidance move global markets more than any other single institution.
BeginnerFOMC
The Federal Open Market Committee — the Fed body that sets U.S. monetary policy, meeting eight times per year to vote on the federal funds rate target.
IntermediateInterest Rate
The cost of borrowing money, set or influenced by central banks — the single most powerful lever in macroeconomics.
BeginnerMonetary Policy
Central bank actions — rate changes, asset purchases, reserve requirements — designed to control inflation and support employment.
BeginnerYield Curve
A graph of Treasury yields across all maturities — from 3 months to 30 years — that maps the term structure of interest rates at a given moment.
Intermediate