Doves, hawks, dragons, and pigeons - the state of the Fed

 

We usually make the distinction between Fed officials as either doves or hawks. Hawks focus on inflation while dove are easy on inflation and more focused on employment. Our scorecard of Fed presidents and board of governors place them on a dove/hawk spectrum. However, we may have to broaden or enliven the spectrum. 

Perhaps chairman Powell is not a hawk but a dragon who will go scorched earth on inflation. Rates will rise until inflation is broken and we get it back to the 2% target. There will be no prisoners, no pause. The Fed will accept a recession albeit the forecast is for a small one. 

The Jackson Hole comments and September FOMC press conference represent a dragon not a hawk. With the November meeting, we will learn if he is still a dragon or just hawkish. The latest GDP number suggests that the dragon will remain.

There are also central bank pigeons, birds that peck at issues but do not seem to have any direction. We have the BOC and the Aussie central banks pulled away from higher expected hikes. They are not doves, but worried pigeons. We have the ECB suggesting a possible pivot and not following through on a strong QT plan. They raise rates but almost apologize for having to do it. They are not doves. They are not really hawks. They are worried birds who are afraid of making a mistake. 

Overall, a simple dove/hawk spectrum is not helpful in these complex times.