In the context of finance and the economy, this has to do with monetary policy, which means it involves interest rates, which matters to mom, pop, Joe six-pack, and everyone in between. In a low rate environment, saving only makes sense if you’ve already cleared all of your higher-interest personal debt. These terms basically signify the outlook or the intention of the central bank. And when Gold prices rise, mining companies often see an even greater rise in valuations than the gold spot itself. Most central banks in the world have a dual mandate. While there are many fundamentals, the central bank meetings and speeches by key central bank officials are important as they form the core of the price movement in the currency markets. The way a central bank communicates these messages to the general markets is by holding a monetary policy meeting. Tonight’s match puts the L.A. Hawks up against the N.Y. Doves. No, you’re actually losing 3% per year on all the funds that you put toward your savings account instead of early payments on your car loan! They tend to pay steady dividends, which become more enticing in the sorts of situations that cause the Fed to drop rates. You will also learn how to decipher the meaning from the central banks, not just during monetary policy statements but also during central banker speeches. I'm Mike Semlitsch the owner of PerfectTrendSystem.com. (This point also applies in hawkish environments - since online savings accounts tend to out yield brick and mortar savings account offerings no matter which direction the Federal Funds Rate is going.). In the United States, the terms hawk or dove are most often applied to members of the Federal Open Market Committee (FOMC) at the Federal Reserve since the 12 members of that committee set Monetary Policy for the entire United States. Hawkish vs Dovish Monetary Policy for Forex Traders. Or if the European Central Bank comes out dovish than expected, then the EUR would depreciate. Find out more about how we use your information in our Privacy Policy and Cookie Policy. It would be great if investors had a crystal ball that would tell them what direction the Fed is going next. Hawks naturally signified aggression, war, and hunting. That growth in demand for stability can add share price growth which can combine with the value provided by the dividends themselves for a profitable investment. You’re in for a treat. Rising rates tend to boost real estate values, so real estate is another option for a hawkish environment. Some of that money also ends up in the hands of consumers, who use it to (you guessed it) consume - which further boosts equity valuations. One of the things to bear in mind is that the markets are always forward looking. However, during the monetary policy meeting, the members of the board leave interest rates unchanged. This meeting is also known as interest rate decision meetings. So let’s get to the good stuff.