Central Bank Hawks and Doves Cheat Sheet

The views of InTouch Capital Markets on the hawks and doves at the European Central Bank (ECB), the FOMC and the Bank of England (BoE) and a recap on the current and future voting members.  We get asked all the time questions like “is the Fed’s Rosengren a hawk or a dove?”, “who are the doves on the ECB?” and “are the voters on the FOMC this year more dovish or hawkish?”.  Here we answer all these questions.

New Absolute Hawk/Dove Scale

We have updated our analysis to introduce a new absolute hawk/dove scale alongside the relative scale we had before, so that it would be easier to understand the position of each central banker. The lowest bound on the scale is 1, indicating “very dovish” members and the upper bound is 5, specifying “very hawkish” members, while 3 represents “no known bias”.

FOMC Hawks, Doves and Voters

FOMC Update – 3rd December. What’s Changed?

In this update, we decided to move Bullard two positions higher but keep his view as dovish (and not super dovish), as he remains optimistic about the pace of the economic recovery. Clarida said that Fed’s current asset purchases are already at a large scale and Yield Curve Control is not under active consideration. Finally, a small tweak between Powell and Williams, as the president sounded a bit more dovish in his testimony before the committee on Banking, Housing and Urban Affairs, noting that Fed is committed to use full range of tools to support economy. Overall, no major changes in the views of the FOMC members.

ECB Hawks, Doves and Voters

ECB Update – 3rd December.  What’s Changed?

Doves: Although, Visco (Italy) appeared worried about the euro strength and the consequent downward pressure on prices at a time when inflation is already too low, we decided to change positions between him and Hernández de Cos, the Spanish governor, after the latter highlighted that “Given the worsening outlook for economic activity and inflation, the ECB should increase the level of monetary accommodation and avoid fragmentation”.

Hawks: A small tweak in the hawkish side, between Weidmann (Germany) and Holzmann (Austria), as both remain the most hawkish members within ECB, but the German governor seems more in favor of further rate cuts following his comment on 5th November that “interest rate cuts can still have the intended effect”.

Neutral: In this update we got the first comments from the Portuguese governor Centeno, who sounded dovish in his interview with Reuters, as he called for more focused support for jobs and companies, while in another speech he supported the idea of expanding the asset purchases in the next meeting. Also after a long time, we got comments from Kazāks (Latvia) stating that “A forecast of a €500bn increase in PEPP isn’t very off the mark and ECB may contemplate extending TLTRO’s from 3yrs to 5yrs”, while he wouldn’t oppose extending PEPP by 12 months. Consequently, we decided to move both members to the dovish side. Finally, Makhlouf (Ireland) also sounded a bit more dovish after reiterating that “We’ll make whatever decisions we need to make, we’ve got the tool kit”.

Bank of England (BoE) MPC Hawks, Doves and Voters

BoE Updated – 3rd December.  What’s Changed?

The main theme for BoE’s MPC is that external members remain more dovish than “internals” and generally in favour of the introduction of negative interest rates. In the last meeting on 5th November, MPC members voted unanimously to increase the QE by a further £150bn, while on the back of the positive Covid-19 vaccine news, Chief Economist Andy Haldane, the only “Hawk” in BoE, highlighted that “It’s hard to know for sure if I would have supported the £150bn QE expansions if I had known vaccine news at the time”. The only change in this update is the tweak between Bailey and Vlieghe, as the latter supported that although BoE is not at a point yet to reach conclusion about negative rates, NIRP is potentially offering “headroom” amid a challenging economy and there is low risk that negative rates become counterproductive.

What is a Central Bank Hawk or Dove?

In general, “hawks” are the members who tend to want tighter monetary policy to temper inflation and growth whilst “doves” tend to want looser monetary policy to support growth and inflation.

Note – InTouch Capital Markets bases its classifications of hawks and doves on recent speeches and voting patterns by the respective members but all views are subjective – very few central bankers actually describe themselves as a hawk or dove. Our views may differ a little from others’. It’s also worth considering that some members tend to stick to being always hawkish or dovish, whilst others tend to be more flexible in their views, switching from time to time.

Authors: Evangelos Doulamis, Michael Colman