Federal Reserve monetary policy must be nimble, pragmatic and flexible in light of uncertainties over how renewed turmoil in financial markets will affect lending to consumers and businesses, according to Fed Vice-Chairman Donald Kohn. "Uncertainties about the economic outlook are unusually high right now. In my view, these uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago," Kohn said in a Wednesday speech to the Council on Foreign Relations. Some Fed watchers believe that "nimble" policy would allow the U.S. central bank to cut rates when it next meets Dec. 11, despite the fact that Fed policymakers moved to a "neutral" stance on rates after their last meeting at the end of October. Kohn wasn't so precise, but he did say that if the renewed turmoil in financial markets was due to bank fears over higher interest rates, this was a concern "that central banks should be able to address." According to Kohn, the key question for policymakers is: How much restraint are developments in the financial markets likely to exert outside the housing sector? "An important issue now is whether concerns about losses on mortgages and some other instruments are inducing much greater restraint and thus constricting the flow of credit to a broad range of borrowers by more than seemed in train a month or two ago," Kohn said. In general, nonfinancial businesses have been in very good condition and households are meeting their obligations, he said. "However, the increased turbulence of recent weeks partly reversed some of the improvement in market functioning over the late part of September and in October," he said.