Definition of hawk

The Federal Reserve has a joint mandate to maximize employment and maintain low inflation. Actually, there is a third part to the mandate - to limit interest rate volatility - but that aspect rarely comes into play.  Given that monetary policy is fundamentally about the management of aggregate demand, any Fed policy that pushes towards one goal, for example higher employment, will move them away from the other goal.

A hawk is a FOMC (Federal Open Market Committee) member who puts more weight on the inflation goal. [1]

With the joint mandate, hawks generally think these are not independent objectives and that by focusing on inflation they make the best possible contribution to growth and to promote employment. Hawks are more inclined to favour tight policy to prevent excess inflation.

When it comes to targetting the inflation rate, some hawks still back 1.5 per cent while most of the committee is now at 2 per cent. [2]

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