St. Louis Federal Reserve President James Bullard cautioned Feb. 26 against the Fed taking an "aggressive" path on interest rate increases, saying the federal funds rate is currently at an appropriate level.

Bullard, who does not vote on monetary policy this year, told reporters he has been concerned that the Federal Open Market Committee could go "too far, too fast" on interest rate hikes, emphasizing that any increases need to be reacting to incoming data rather than getting ahead of those figures.

"I would like the committee to get out of the business of how many rate hikes are going to be in a year," Bullard said after speaking at a National Association for Business Economics conference. "We've got to get back to the idea of where's the data going to go in this year, and if it surprises to the upside then ... I'm happy to go along with that. But you need the surprises, it seems to me, to push the rates higher."

Fed officials have currently penciled in three interest rate increases this year, though some analysts think the Fed may opt for more if inflation strengthens and if a recently passed tax overhaul poses risks of overheating the economy.

Bullard said he was modestly optimistic about the tax law's potential to boost weak productivity growth and push up wages, as companies invest more money in the U.S. But he also noted that companies "have had a lot of cash on hand for a long time" and could have made such investments earlier.

The Fed, he said, should not "get out in front of this process" and should wait and see whether those investments actually happen and productivity rises.

"If it does, I'm perfectly happy to react to that data," he said. "But I don't think with inflation as low as it is, that we have to be pre-emptive."