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Dovish (Fiscal Economy) Explained
A Dove is an economic policy adviser who advocates for low-interest rates believing that they increase employment and encourages economic growth. They believe a low-interest rate increases the demand for consumer borrowing and results in increased consumer spending. They are of the opinion that the negative effects of low-interest rates or inflation are relatively negligible. The statements issued by them suggesting the above is called dovish.
A Little More on Dover or Dovish Views
Dove is the opposite of hawk (or hawkish). In economics, a hawk is the one who advocates for higher interest rates for curbing inflation. The doves try to protect the consumers and increase the employment rate by lowering the interest rate. In the United States, the Federal Reserve members who promote low-interest rate are the doves and their statements are dovish. Journalists and politicians who advocate for the low-interest rate are also considered as the doves. Economists can also be dovish in nature. When the interest rate is low the consumers tend to take out car loans, mortgages and credit cards and spend more. This creates a job as the demand increases. This affects the economy positively. But a low-interest rate for long may result in inflation. As the demands increases eventually the price of the commodities shoots up as well. The workers also earn more as the employment rate rises, that increases their buying capacity and they start buying the commodities at a high price. That leads to the cycle of the price increase and wage increase and that ultimately results in inflation.
Reference for Dovish Economic Policy
- https://www.investopedia.com/terms/d/dove.asp
- https://en.wikipedia.org/wiki/Monetary_hawk_and_dove
- https://financial-dictionary.thefreedictionary.com/Dovish
