Taper or no Taper. Tapering is not tightening but flow is more important than stock. Doves being hawkish and hawks fearfully dovish... We have seen it all in the last few weeks. In order to keep it all in perspective, Credit Suisse have created this simple cheat-sheet of their informal determination of the Fed official's policy biases based on each official’s voting history and public comments.
- In the current environment, a “hawkish” bias implies a preference for less stimulative monetary policy, seeing the costs of the Fed’s ongoing quantitative easing program as rising relative to its benefits.
- In more general terms, a “hawkish” bias implies a preference for less accommodative monetary policy overall, weighing the risks of inflation as greater than the upside of stimulated growth.
- A “dovish” participant has a tendency to prefer more accommodative monetary policy, supporting the use of low interest rates, forward guidance, and the Fed’s balance sheet to stimulate growth while placing less emphasis on the risks of inflation.
Source: Credit Suisse