Which term describes a policy stance that prioritizes higher rates to curb inflation?

• A. Hawkish
• B. Dovish
• C. Neutral
• D. Aggressive

Answer: (A)

When central banks describe their stance, they’re signaling whether they favor tightening to slow inflation or easing to support growth. The term for prioritizing higher interest rates to curb inflation is hawkish. This stance aims to tighten financial conditions—raising rates, reducing liquidity, and cooling demand—to bring inflation down and anchor inflation expectations. It often accepts slower growth or a higher unemployment trade-off in the short term to achieve price stability over the longer run.

Dovish describes a bias toward lower rates and looser policy to support employment and growth, potentially tolerating higher inflation in the short run. Neutral means no strong tilt toward tightening or easing. Aggressive is not the standard label for this posture, and when people refer to the formal stance aimed at curbing inflation, hawkish is the precise term.