Definition: Hawkish describes a stance or outlook on economic policy, particularly in relation to interest rates, that favours tighter or more restrictive measures to control inflation. Central banks or policymakers with a hawkish stance typically support raising interest rates or reducing monetary stimulus to curb rising prices and prevent the economy from overheating.

Key characteristics:

• Focus on inflation control: Hawkish policymakers prioritize keeping inflation in check, often over supporting high levels of employment or economic growth.
• Interest rate increases: A hawkish outlook usually signals future rate hikes to prevent inflation from exceeding target levels.
• Monetary tightening: Hawkish policies may also include reducing quantitative easing or other forms of economic stimulus, aiming to slow down demand and reduce upward pressure on prices.

Example: If the Bank of Canada signals a hawkish stance, it indicates that it’s concerned about inflation and may raise interest rates, making borrowing more expensive for consumers and businesses.

Last modified: November 5, 2024