When inflationary pressures become a concern, central banks usually have a hawkish stance because they want to raise interest rates.
Hiking the interest rate can tighten economic activity because of higher overall borrowing costs. Lower economic activity can lead to lower money supply which fights the effects of inflation.
Conventionally hawkish statements by the central bank members are seen to boost the country’s currency. One reason for this is that hawkish policies decrease the money supply and therefore drive up the nation’s currency value aboard.
Being dovish is having the opposite sentiment and condition, calling for lower interest rates.
