A dove prefers the rates kept low:easy money, soft and slow.
A term describing a central bank stance that favours lower interest rates and looser monetary policy to support economic growth.
A currency has historically tended to weaken when its central bank sounds more dovish than expected, although the reaction depends on what was already expected.
In plain words
Dovish describes a central bank, or one of its policymakers, that leans towards lower interest rates and looser policy, usually because it is more concerned about weak growth or unemployment than about inflation. The opposite is hawkish: leaning towards higher rates to restrain inflation.
See it move
In the upper zone: Hawkish
Why it matters
Commentators use the word to sum up the tone of a decision or a speech. A currency has historically tended to weaken when its central bank sounds more dovish than expected, since lower expected interest rates make it less attractive to hold; the reaction depends on what was already expected.
Worked example
An example only. The figures are round and invented for the arithmetic: they are not market prices.
A central bank holds its rate at 4.00% but says cuts are likely; markets had expected 4.00% at the end of the year and now expect 3.50% (invented figures).
- 1Rate todayunchanged at 4.00%
- 2Expected year-end rate before the meeting4.00%
- 3Expected year-end rate after it3.50%
- 4Shift = 4.00% − 3.50% = 0.50 percentage points
Nothing was cut, yet the message was dovish: expectations moved down by half a point.
A common mistake
Dovish is sometimes taken to mean that rates have been cut. It describes a leaning: a bank can sound dovish while leaving rates unchanged, or while raising them by less than expected.
Check yourself
Learn more
- Academy lessonCentral bank policyWho the major central banks are, how rate decisions, quantitative easing and forward guidance work, and how policy feeds through to currencies.
- ExplainerHow central bank decisions move currenciesRates, forward guidance and balance-sheet policy reach exchange rates through one channel above all: what the market expected beforehand.
Educational information, not investment advice or a recommendation to trade.