Fed's Bullard: Low rates may be causing low inflation

James Bullard, president and CEO of the Federal Reserve Bank of St. Louis.
David Orrell | CNBC
James Bullard, president and CEO of the Federal Reserve Bank of St. Louis.

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Low rates may be causing low inflation, St. Louis Fed President James Bullard theorized in Friday remarks.

Bullard, who is a voting member of this year's Federal Open Market Committee, suggested in prepared remarks for a policy conference in Frankfurt, Germany that the current period of low interest rates and low inflation could potentially persist for a long period of time. Furthermore, raising rates could conceivably increase inflation, he said.

He didn't conclude this argument was correct, but suggested it deserved further analysis.

The St. Louis Federal Reserve president also discussed the normal argument for raising rates, saying the FOMC's policy remains extreme, labor markets are close to normal, and inflation is close to the Fed's target levels.

Get the market reaction here.

—CNBC's Steve Liesman contributed to this report.