The term ‘dovish‘ indicates a tendency of macroeconomic policies to keep interest rates low with the aim of accelerating growth and economic development.
Since it is an attitude aimed at promoting economic well-being and encouraging the purchase of goods and services, this definition is often associated with the image of the dove, symbolically the bearer of peace and of a docile disposition.
The opposite are hawkish policies, i.e. harsher manoeuvres aimed at raising interest rates.
Macroeconomic policies are generally implemented by central banks (such as the ECB in Europe and the Fed in the US) or other monetary policy bodies. The primary objective of these entities is to regulate the level of employment, thereby maintaining economic stability and counteracting price fluctuations.
The dovish manoeuvres, specifically, aim to increase economic stability in a period of severe economic recession by strengthening confidence in markets and businesses.
When interest rates fall, on the one hand consumers are more inclined to invest more money and apply for mortgages, leading to a general rise in the prices of securities and financial markets, on the other hand businesses have more incentives to expand their workforce and develop new projects.
The dovish policies may also require the injection of circulating money through unconventional monetary policy instruments such as quantitative easing.