Fed Vice Chairman Bolsters Rate-Cut Hopes

Updated from 9:39 a.m. EST

Federal Reserve Vice Chairman Donald Kohn gave hope to the rate-cut camp Wednesday, saying that the current state of the financial markets means the central bank must be "flexible and pragmatic."

Speaking in New York, the Fed's No. 2 banker behind Chairman Ben Bernanke acknowledged that the level of uncertainty surrounding the economy is unusually high at the moment, given the unrest being caused by questions about subprime mortgages and asset-backed securities.

"In my view, these uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago," he said. ...