Fed's Bullard sounds note of caution on inflation

St. Louis Fed President James Bullard
Adam Jeffery | CNBC
St. Louis Fed President James Bullard

St. Louis Federal Reserve President James Bullard said Wednesday that inflation continues to run on the low side, but that doesn't mean excessive inflation couldn't return in the future.

In a speech before the Rotary Club luncheon in Paducah, Ky., Bullard said that if the Fed fails to hit the 2 percent inflation target set by Fed Chairman Ben Bernanke in January 2012, it risks losing credibility.

Despite broad concerns over the effect of the Fed's $85-billion-per-month bond-buying program, so far inflation has not materialized.