Hawk-Dove Labels Too Crude – The Dual Mandate Tells the Real Story

There's a modern tendency to label Fed officials as hawks or doves, mistakenly assuming rate hikes mean hawkish and cuts mean dovish. Yet voting outcomes rarely see more than one or two dissenters. Can nearly the entire committee really flip from hawkish to dovish over just a few years? That seems rather peculiar. So how should we actually categorise Fed hawks and doves?

I've developed an approach. The Fed's policy rate responds to both inflation and employment – while this dual mandate wasn't formally codified until 2012, it has effectively guided policy for decades, becoming more established with inflation targeting in the 1990s.

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KC Law (Economist)

Law Ka Chung is a Hong Kong economist and financial columnist.