MNI's FOMC Hawk-Dove Spectrum provides an assessment of Fed policymakers' views on the monetary policy stance.
MNI's FOMC Hawk-Dove Spectrum provides an assessment of Federal Reserve policymakers' views on the outlook for the U.S. central bank's monetary policy stance. This allows us to put FOMC members' public comments into context and assess their potential impact on market rate pricing.
Here is the latest matrix (last updated December 10, 2024):
What Are "Hawks" And "Doves"? The terms "hawk" and "dove" have long been used by Fed watchers to describe individual members of the Federal Open Market Committee (FOMC) and their attitudes about how best to calibrate policy to achieve the Fed's dual mandate of maximum employment and stable prices. The distinction recognizes that in formulating policy, there is often a tradeoff between the two objectives.
- "Hawk" commonly denotes a policymaker who is more concerned with the stable price mandate, and is more likely to favor a relatively tight stance of monetary policy in order to keep inflation and inflation expectations anchored. While such a stance at times puts the employment mandate at risk, hawks often see stable prices as a prerequisite to achieving full employment. In short, hawks - when in doubt - tend to favor relatively tight monetary policy.
- "Dove" refers to a policymaker who is relatively more willing to risk higher inflation in order to maintain or achieve full employment. They may be perceived as generally biased toward looser monetary policy.
"Influence" and "Hawkishness/Dovishness": MNI's FOMC Hawk-Dove Spectrum attempts to categorize participants in the FOMC decision-making process by the degree to which they are relatively likely to pursue easing or tightening, both in absolute terms and relatively versus their colleagues.
- The y-axis runs from Most Dovish (-10) to Most Hawkish (+10), where each extreme represents MNI's qualitative assessment of the degree to which the participant is hawkish/dovish. A score of +10 would imply that the member believes that aggressive monetary tightening is warranted, both in absolute terms and compared with colleagues; -10 would denote the opposite. A score of between -2 and +2 is considered relatively neutral.
- The x-axis "influence" scale assigns a score of 0 to 10, based on the participant's role on the Committee. The FOMC consists of 12 members, including 7 on the Board of Governors plus the New York Fed president, with the 4 remaining positions filled on an annual rotational basis from the 11 total regional Reserve Bank presidents.
- The Chair of the Federal Reserve receives a 10 on the "influence" scale, with the remainder of the Board of Governors and the New York Fed president between 7 and 8. The regional presidents receive scores based on the current status of the annual voting rotation. Current-year voters score a 6, while those who are not voters are limited to a score of 5. Among non-voters, those due to vote next year receive higher influence scores (rising over time as their voter year approaches), and vice versa.
How to interpret: MNI's Hawk-Dove Spectrum is intended to be interpreted and used in two ways:
- First, to understand the "absolute" stance of policy attitudes, for both the individual and the Committee. It's a quick way of seeing whether at any given time, a participant seeks tighter or looser policy versus the current policy.
- Second, to understand the "relative" stance of policy attitudes. This is particularly important since, as a Committee, it tends to be the case that all participants are either in the "Hawkish" camp (ie consensus to tighten policy), or the "Dovish" camp.
- This allows us to put FOMC members' comments into context and assess their potential impact on market rate pricing. If a FOMC participant calls for aggressively easing policy, that might not have an impact if they are already considered to be very Dovish. But if a Hawk expresses a view on future policy that is Dovish versus their position on the Hawk-Dove spectrum, or vice-versa, this has a greater potential to move markets than if they express a view that is in line with their overall stance.
Participants' policy biases are not permanent. For example, a regional Fed president who has consistently expressed caution over risks of higher inflation and advocated a relatively tight monetary policy stance could - on the basis of incoming data and analysis conducted by their bank - shift to a more neutral stance on future policy, or even a dovish stance. We would categorize this as having moved from a "more hawkish" (+3 to +10) to a "neutral" (-2 to +2) stance.
MNI updates the Hawk-Dove Matrix on a regular basis - at least every six weeks, to coincide with FOMC meetings, but more often if circumstances warrant (such as a major change in participants' outlooks between meetings). They can be found in MNI's Fed previews.
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