What does hawkish mean?
Hawkish is the opposite of dovish. And it’s a term used to describe behaviour in the markets and the economy. Find out what all the talk is about.
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If you’re a fan of our “Making sense of the markets” weekly column, where we break down what news headlines mean for Canadian investors, you will have read “hawkish” as a theme in the years coming out of the pandemic.
“Hawkish” describes the stance of supporting policies that aim to fight inflation—raising interest rates and decreasing the supply of money. One major example of a hawkish action is the Bank of Canada’s approach to inflation by raising interest rates. It’s considered hawkish because of how steep the overnight rates have been increased—approximately 1 basis point each announcement in 2022.
The opposite of hawkish is dovish, meaning a more “peaceful,” less assertive approach. A dovish stance supports lowering interest rates and increasing the money supply in order to stimulate economic growth and job creation. Monetary policy-makers can be hawks, doves or neither (centrists)—and they may change their stance depending on the situation.
Example: “The BoC chose to be even more hawkish on inflation than our southerly neighbour in the U.S.—the Federal Reserve.”
Read more about inflation:
- What the Bank of Canada’s latest overnight rate hike means for your finances
The central bank’s overnight interest rate sets the tone for the prime rates offered by banks. We explain what changes in the policy rate mean for you.
- A Guide to inflation: Price changes, the pandemic and your pocketbook
This guide will help you understand what inflation is, how it’s calculated, and what it means for your personal finances.
- 3 ways a U.S. rate cut might impact Canadian investors
We’re already seeing some of the effects, even before it’s happened: the loonie is rising and equities are up.
- A contrarian approach to inflation, interest rates and the markets
Inflation and interest rates are likely to rise. Here’s how to reposition portfolios in response.
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