I'd Be Willing to Scale Back QE, Fed's Bullard Says

St. Louis Federal Reserve Bank President James Bullard told CNBC on Tuesday that he'd be willing to reduce the central bank's massive bond-buying program in "small increments."

Bullard said in a "Squawk Box" interview that he'd be in favor, as the economy improves, of altering the pace of quantitative easing, which has been running at $85 billion a month of Treasury and mortgage-backed securities purchases by the Fed.

"You could adjust [QE] up or down" he added. "But the economy will most likely continue to improve and we'll be in a position to slowly ratchet down the pace of purchases." Bullard added that first-quarter economic growth looks like it's going to be "quite a bit stronger than we expected at the beginning of January."

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The Federal Reserve wants to eventually get back to normal monetary policy, he said, noting that the size of the central bank's balance sheet compared to U.S. gross domestic product is not as big that of other countries.

Fed policymakers have said they need to see "substantial improvement" in the labor market—with a target of 6.5 percent unemployment—before they consider slowing or changing their easy monetary stance.

Bullard acknowledged, however, that there are some risks in tying monetary policy to the unemployment rate.

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The latest U.S. employment report showed that the economy produced far fewer jobs in March than economists had forecast—creating only 88,000 new nonfarm payrolls. The jobless rate did fall to 7.6 percent, but the labor-force participation rate tumbled to a 34-year low.

Bullard countered, however, that there have also been plenty of upbeat labor market data recently, showing "200,000 [new] jobs over the last six months." He added that he's standing by his projection that the unemployment rate will fall to near 7 percent by the end of the year.

By CNBC's Matthew J. Belvedere; Follow him on Twitter @Matt_SquawkCNBC