Monetary policy may differ depending on how the market is functioning, but if the Fed moves to stem a disruption, it must be ready “to take back some of that insurance” when recovery occurs, Federal Reserve Board governor Frederic S. Mishkin said Friday.

“The monetary policy that is appropriate during an episode of financial market disruption is likely to be quite different than in times of normal market functioning,” Mishkin said, according to prepared text released by the Fed.

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