What Is a Dove?
Refers to the tone of language used to describe a situation and the associated implications for actions. For example, if the Federal Reserve bank refers to inflation in a dovish tone, it is unlikely that they would take agressive actions. Similarly, a CEO might use dovish language to describe an important event facing the firm. This indicates that the firm is unlikely to take strong actions. Dovish sometimes means conciliatory. Opposite of hawkish.
Doves prefer low-interest rates as a means of encouraging economic growth because they tend to increase demand for consumer borrowing and spur consumer spending. As a result, doves believe the negative effects of low-interest rates are relatively negligible. However, if interest rates are kept low for an indefinite period of time, inflation rises.
Derived from the placid nature of the bird of the same name, the term is the opposite of "hawk." A hawk is, conversely, someone who believes that higher interest rates will curb inflation.
This isn't the only instance in economics where animals are used as descriptors. Bull and bear are also used, where the former refers to a market affected by rising prices, while the latter is typically one when prices are falling.
In the United States, doves tend to be the members of the Federal Reserve who are responsible for setting interest rates, but the term also applies to journalists or politicians who lobby for low rates as well. Ben Bernanke and Janet Yellen were both considered doves for their commitment to low-interest rates. Paul Krugman, an economist and author, is also a dove because of his advocacy for low rates.
But people don't necessarily have to be one or the other. In fact, Alan Greenspan, who served as chair of the Federal Reserve between 1987 and 2006, was said to be fairly hawkish in 1987. But that stance changed over time and he eventually became more dovish, as he navigated the bursting of the Internet bubble of the 1990s, as well as the impact of the attack of September 11, 2001, and other major, world-changing events. Realistically, the people of the United States—investors and non-investors alike—want a Fed chair who can switch between hawk and dove depending on what the situation calls for.