Ever wonder why economists seem to be talking about a veritable zoo when they give the lowdown on the latest in the markets? We lift the lid on the definitions of this perplexing economic terminology.

1. JARGON BUSTER
Currency UK Ltd
Ever wonder why economists seem to be
talking about a veritable zoo when they give
the lowdown on the latest in the markets?
We lift the lid on the definitions of this
perplexing economic terminology

2. Dove
• In the case of monetary policy, a dove is an individual who
believes that low interest rates should be maintained. They
maintain that low interest rates encourage growth within
economies as they increase consumer borrowing demand
and boost consumer spending.
• Sustained low interest rates can cause notable increases in
inflation, but doves believe that this negative effect is
minimal in the grand scheme of things.
• Doves are in favour of quantitative easing, considering it a
means of stimulating an economy.
• Adjective - dovish

3. Hawk
• The opposite of a dove. These individuals are
pro high interest rates as they see them as a
means of controlling inflation. They are less
concerned with economic growth.
• Hawks are opposed to quantitative easing as
they believe that it distorts asset markets.
• Adjective - hawkish

4. Bull
• A bull is an individual (or more specifically an investor)
who believes that a certain market, industry or security
will rise in value. A bull will purchase assets presuming
that they will rise in value, and can consequently be
sold at a later date for a higher price.
• Adjective - bullish
• Example: Dollar bull
• A Dollar bull is a speculator or investor who believes
that the US Dollar is going in a positive direction and
will rise in value in comparison to other currencies. For
them, it is complete and utter madness to bet against
the US economy and USD.
https://www.currencyuk.co.uk/about-cuk/what-we-do

5. Bear
• The opposite of a bull. Bears believe that a
certain market, industry or security will
decrease in value. Generally negative about a
given market, security or asset (as opposed to
a bull’s overwhelming optimism), bears will try
to profit from falling prices.
• Adjective - bearish
https://www.currencyuk.co.uk/about-cuk/what-we-do

6. Quantitative Easing (Q.E.)
• A monetary policy that increases money
supplies and lowers interest rates. In this
policy central banks purchase securities from
the market (or government securities like
bonds). This inundates financial institutions
with capital, thereby increasing the money
supply with the aim of promoting lending and
increasing liquidity.
https://www.currencyuk.co.uk/about-cuk/what-we-do

7. Currency War
• A currency war is a scenario in which several
countries deliberately attempt to weaken the
value of their own currencies, thereby
stimulating their respective economies.
Quantitative easing and lowering interest
rates can be used to decrease the value of
currencies.
• This is also known as “competitive devaluation
https://www.currencyuk.co.uk/about-cuk/what-we-do

8. Long
• This is the buying of a currency, stock or
commodity in the belief that it will increase in
value.
• This is also known as “long position”.
https://www.currencyuk.co.uk/about-cuk/what-we-do

9. Short
• This is the selling of a borrowed currency, stock or
commodity in the belief that it will decrease in
value. For example, if an investor sold a borrowed
currency on the market, the currency would
eventually need to be returned. The investor
does this by buying back the currency. If the
currency has decreased in value, the investor
buys it back for less than it was sold,
consequently making a profit.
• This is also known as “short position”.
https://www.currencyuk.co.uk/about-cuk/what-we-do

10. Market Sentiment
• This is the prevailing attitude of investors
toward a particular market or security. The
activities and changes in security price in a
market communicate its sentiment e.g.
increasing prices reveal a bullish sentiment.
https://www.currencyuk.co.uk/about-cuk/what-we-do

11. Consumer Sentiment
• A statistical measure, this indicates the health
of the economy in the opinion of the
consumer.
https://www.currencyuk.co.uk/about-cuk/what-we-do

12. Inflation
• This is the rate of increase in the price of good
and services. To keep economies running
without a hitch, central banks restrict inflation
and avoid deflation like the plague.
https://www.currencyuk.co.uk/about-cuk/what-we-do

13. Single Supervisory Mechanism
• A supervisory role to monitor the financial
stability of banks based in participating EU
states, started on 4 November 2014.
https://www.currencyuk.co.uk/about-cuk/what-we-do

14. Thanks for learning!
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