The Federal Reserve should concentrate its unconventional monetary stimulus on mortgage asset purchases, according to a new study released on Friday, ditching Treasury bond buys whichthe authors say have not had muchof an effect.
Reutersreported that presented at the Kansas City Fed’s annual Jackson Hole conference, the paper argues rather controversially that the central bank should begin its exit strategy by selling Treasuries, something that is hard to conceive given the recent speedy selloff in government bonds.
The absence of concrete guidance as to the goal of asset purchases, which has been vaguely defined asaimed toward substantial
improvement in the outlook for the labor market, neutralises their impact and complicates an eventual exit, according to the paper’s authors, Arvind Krishnamurthy of Northwestern andAnnette Vissing-Jorgensen of Berkeley.
“Without such a framework, investors do not know the conditions under which (asset buys) will occur or be unwound, which undercuts the efficacy of policy targeted at long-term asset values,” the authors write.

http://www.punchng.com/business/homes-property/fed-should-focus-on-mortgage-buys-study/