Fed's Kohn says need to be "nimble" on policy

DALLAS (Reuters) - Federal Reserve Vice Chairman Donald Kohn said on Friday that policy-makers must be nimble in conducting policy, especially amid recent market turbulence.

Asked whether the Fed should not deviate from standard policy rules, Kohn said: "We need to be alert that the (policy) reaction needs to be changed as financial markets evolve."

He reiterated a line from his speech on the economic outlook on October 5 that the central bank would have to be "nimble" in conducting policy to promote growth and keep inflation tamed.

Kohn was answering questions after speaking at a Dallas Fed conference on the contributions of renowned Stanford University professor John Taylor's work on monetary theory and policy.

Asked whether he had changed his mind about inflation targeting, Kohn said his views had evolved somewhat and that inflation expectations were "a little better anchored" in inflation targeting.

But "that doesn't mean I've gone over to that side entirely," Kohn said, adding that the central bank needed to be careful about sacrificing "nimbleness and flexibility" in policy decision-making.