Your guide to the US Federal Reserve's policy doves and hawks, courtesy of BAML

  • The US Federal Reserve has already increased its funds rate eight times since late 2015. Current member forecasts suggest there’ll be five more increases before the tightening cycle is expected to end.
  • The FOMC has undergone significant change in recent times with a large number of new faces and view.
  • BAML has evaluated who’s dovish and who’s hawkish among current and potential FOMC members.

The US Federal Reserve has already increased its funds rate eight times since late 2015, with Federal Open Market Committee (FOMC) members indicating that they expect to lift rates once again this year, and another three times in 2019, based on their median forecasts offered in September.

That’s a lot more than the two rate hikes currently favoured by financial markets over that period, meaning there’s likely to be plenty of attention on the views of FOMC members in the period ahead, perhaps even more than usual.

What they say will obviously help guide market expectations, and with it broader moves in financial markets, given the era of forward guidance that will currently live in.

Creating unnecessary surprise is definitely seen to be a no-no among policymakers who are acutely aware of what market turmoil it may bring.

However, the FOMC has undergone substantial change in recent times. Members have left or retired, bringing renewal to the FOMC, including a new Chairperson in Jerome Powell.

That means there’s a whole new set of views that markets need to evaluate.

Who are the policy doves, or hawks, that now sit upon the committee? And who will be voting in the years ahead, something that could see the balance of power shift from one side of the policy spectrum to the other?

Thanks to Joseph Song and Mark Cabana, members of Bank of America Merrill Lynch’s US Rates and FX Strategy team, the chart below answers those very questions, at least in their opinion.


It shows what they deem to be the dove-hawk spectrum of the current FOMC.

They’ve also included a quick assessment on what potential additions to the FOMC could mean for policy direction.

Those considered to be policy doves, favouring low interest rates, are shown in blue shading while those considered to be hawks, holding the opposite views to the doves in order to prevent a potential breakout of inflation, are indicated with red shading.

While this is Song and Cabana’s views on where individual members sits, not a hard and fast rule as to what they’ll definitely do, it does provides a useful guide as to what they’re likely to say in regards to the outlook for policy settings.

If those members on the hawkish side of the spectrum suddenly sound dovish, or vice versus, it could signal that a potential change in outlook could be on the way.

It’s something definitely worth bookmarking for anyone with an interest on the outlook for Fed policy.

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