What Is a Dove Monetary Policy?

An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that inflation and its negative effects will have a minimal impact on society. This term is derived from the docile and placid nature of the bird of the same name, and is the opposite of the term "hawk'. Statements that suggest that inflation will have a minimal impact are called dovish. The Federal Reserve, the central bank of the US, has two mandates, full employment and a stable price level. This dual mandate creates a tension, and a balancing act, because actions that focus on one side can worsen conditions on the other.

As a result, doves believe the negative effects of low interest rates are negligible in the larger scheme of things. However, if interest rates are kept low for an indefinite period of time, inflation could rise considerably. Doves tend to say temporary blips in inflation above 2% are a price worth paying for more jobs. Previous Fed Chairman Ben Bernanke and current Chairwoman Janet Yellen are considered doves, while Dallas Fed President Richard Fisherand the President of the Philadelphia Fed, Charles Plosser, are considered hawks.