Federal Reserve Bank of St. Louis President James Bullard said he will urge reducing the pace of central bank asset purchases by the middle of the year if U.S. growth picks up as he expects.

“We should think about tapering or adjusting the program,” Bullard said today in an interview in Washington. “If you get some good data for a couple of months, maybe you’d say, ‘Okay, we go back to $75 billion per month instead of $85 billion or something like that.’”

Bullard backed the Federal Open Market Committee decision this week to continue purchasing securities at the rate of $85 billion a month after growth stalled last quarter. Policy makers have pushed the benchmark interest rate close to zero and expanded Fed assets to more than $3 trillion to spur growth and reduce unemployment.

The St. Louis Fed president said he expects the U.S. unemployment rate, 7.9 percent in January, will drop to the “low 7s” by year’s end, which he said would meet the FOMC’s test of “substantial improvement” in the labor market needed to end purchases. “Almost anybody would have to say that would be substantial improvement compared to where we were at the time of the launch of QE3,” he said.

Yet it would be problematic to stop expansion of the balance sheet at year’s end without slowing purchases earlier, Bullard said.

Cold Turkey

“You don’t want that cold turkey aspect to the program,” he said. “If we got some good signs through the spring or the summer, then I think we could throttle back just a little bit without saying you are going to end the program on any particular day.”

The St. Louis Fed president’s support of the FOMC purchases came after he last month offered a mixed assessment of bond buying, calling it a “very aggressive policy” that is “making me a little bit nervous.” Kansas City Fed President Esther George dissented from the decision in her first vote, citing concern that record stimulus could increase the risk of financial instability.

Bullard, in today’s interview immediately after the release of last month’s employment data, said the three-month average payroll growth of 200,000 jobs a month shown in the report is “an encouraging sign for the U.S. economy.”

“The 200,000 a month for three months is impressive,” he said. “Unemployment did tick up but generally speaking unemployment is down from where it was last September when the Federal Reserve first went into QE3,” he said.

Payrolls rose 157,000 following a revised 196,000 advance in the prior month and a 247,000 surge in November, Labor Department figures showed today in Washington. The jobless rate increased to 7.9 percent from 7.8 percent.