Hawkish / Dovish
The market expects a 50-basis-point increase, but the bank raises by 25 and signals a pause. The rate rose, yet the package may be dovish relative to expectations. Keeping a rate unchanged can be hawkish if a cut was expected.
The stance is relative
Hawkish normally means stronger emphasis on restraining inflation or tighter monetary conditions; dovish means softer conditions. Describe changes relative to prior communication and pricing rather than assigning every decision a permanent label.
The entire information package
The decision, votes, forecasts and press conference can send different signals. Participants' projections are not unconditional commitments to future rates. Distinguish an individual's views from the institution's official position.
Transmission to a currency pair
Compare the changed expected path with that of the other currency. Growth, risk and positioning matter too. The first seconds' response can reverse after details are assessed; a policy label does not replace risk management.
FAQ
Does hawkish always mean a rate increase?
No. The absence of an expected cut or stronger guidance can also be hawkish.
Does dovish guidance guarantee depreciation?
No. The assessment is relative, and the guidance may already be priced or outweighed by other news.
