In Fed Watchers’ Eyes: Hawks, Doves and Monetary Policy

36 Pages Posted: 23 Aug 2019 Last revised: 1 Apr 2020

Date Written: 2019

Abstract

I construct a novel measure of policy preferences of the Federal Open Market Committee (FOMC) as perceived in public. This measure is based on newspaper and financial media coverage of 130 FOMC members serving during 1960-2015. Narratives reveal that about 70 percent of these FOMC members are perceived to have had persistent policy preferences over time, as either inflation-fighting hawks or growth-promoting doves. The rest are perceived as swingers, switching between types, or remained an unknown quantity to markets. Hawk and Dove perceptions capture "true" tendencies as expressed in preferred rates, forecasts and dissents of these FOMC members well. At the FOMC level the composition of hawks and doves varies significantly, featuring slow- and fast-switching hawkish and dovish regimes, due to the rotation of voting rights each year, members’ turnover and swings in preferences.

Keywords: monetary policy, Federal Reserve, FOMC, policy preferences, inflation

JEL Classification: E43, E47, E63, G12

Suggested Citation

Istrefi, Klodiana, In Fed Watchers’ Eyes: Hawks, Doves and Monetary Policy (2019). Banque de France Working Paper No. July 2018, WP #725, Available at SSRN: https://ssrn.com/abstract=3441659 or http://dx.doi.org/10.2139/ssrn.3441659

Klodiana Istrefi (Contact Author)

Banque de France ( email )

Paris
France

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