What is a Hawk?

A hawk is a person, usually in a politically oriented profession, who favors government efforts to control inflation or who favors reducing the federal budget deficit.

How Does a Hawk Work?

Let's assume John Doe works for the presidential administration as an economic advisor. He believes that higher interest rates could control the economy's runaway inflation, and that if the Federal Reserve would just increase its lending rates, this could stabilize the economy. He advises the president of this and encourages others in the administration to encourage the Federal Reserve to increase its rates. John Doe is a hawk.

Jane Smith is a deficit hawk. She believes that reducing government spending is crucial to decreasing the government's budget deficit.

Why Does a Hawk Matter?

The political world is full of nicknames. Hawks are of particular interest to the business community because they often influence or at least put pressure on various parts of the government to take actions that can affect the values of stocks, bonds and other securities.