Federal Reserve Vice Chair Lael Brainard has said that the U.S. central bank will most likely stay on its path of aggressive rate hikes to combat record inflation. Speaking with CNBC’s Sara Eisen during a live “Squawk on the Street” on Thursday, Brainard said that continued rate increases will be the Fed’s most likely path until inflation is curbed.
“Right now, it’s very hard to see the case for a pause,” Brainard said. “We’ve still got a lot of work to do to get inflation down to our 2% target.”
However, Brainard noted that Fed policymakers will continue to rely on data to determine their actions.
Implementing two more 50 basis point rate increases over the summer then taking a step back in September is an idea that a few officials have floated. Minutes from the Federal Open Market Committee’s May meeting revealed that the central bank intends to deliver more 50 basis point rate hikes this year, likely at each remaining meeting on the calendar. The Fed may also raise interest rates more than the market currently anticipates as a way of tamping down inflation.
According to Brainard, bringing inflation down remains the Fed’s top priority and shouldn’t significantly harm an economy where household and corporate balance sheets are strong.
This week, President Joseph R. Biden met with Federal Reserve Chairman Jerome Powell to discuss high prices, writing in an op-ed in the Wall Street Journal that the Fed has the “primary responsibility to control inflation.” However, Biden said he wouldn’t attempt to influence the central bank’s decisions.
With inflation at record heights, fixed income investors are hungry for yield. The Invesco CEF Income Composite ETF (NYSE Arca: PCEF) is a “fund of funds” that offers exposure to a basket of closed-end funds that invest in taxable investment-grade fixed income securities, taxable high yield fixed income securities, and others that utilize an equity option writing (selling) strategy.
PCEF, which tracks the S-Network Composite Closed-End Fund Index, invests its assets in the common shares of funds included in the index rather than in individual securities.
“This ETF is one of the more unique offerings within the ETP lineup, offering exposure to a basket of closed-end funds that invest in various types of fixed income securities,” according to analysis from VettaFi. “Unlike ETFs, closed-end funds often trade at a premium or discount to their NAV, introducing both another risk factor and an opportunity to enhance current returns.”
The fund has a 30-day SEC yield of 8.27% as of June 1.
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vettafi.com is owned by VettaFi, which also owns the index provider for PCEF. VettaFi is not the sponsor of PCEF, but VettaFi’s affiliate receives an index licensing fee from the ETF sponsor.