The Fed's Fuzzy Dove-Hawk Divide
Posted at 9:45 a.m. on Nov. 30, 2012
FT Alphaville notes that while observers of the Federal Reserve often look at the number of “hawks” and “doves” on the Federal Open Market Committee, the “dove-hawk spectrum is an imperfect way to understand the FOMC, as the definitions…can vary according to circumstances.”
“Right now the use of these terms refers to something like inflation-tolerance, but also to tolerance for Bernanke’s willingness to use unconventional policies to pursue the Fed’s objectives… at some point, Bernanke may try to lead the FOMC to change its calendar-based approach of projecting when rates will eventually rise, to an approach that uses such targets. How probable that is, we’re not really sure. Equally unclear to us is whether specific targets will be adopted to determine the pace of large-scale asset purchases, which are currently open-ended.”
