The U.S. Federal Reserve is taking on a lot of inflation risk by purchasing bonds that expand its balance sheet, St. Louis Fed President James Bullard said on Monday.

"I do think it's a risk and I do worry about it," he told students at the Utah State University Jon M. Huntsman School of Business, adding that inflation can be avoided if properly managed.

The Fed's ultra easy policies in the last few years included some $2.3 trillion in asset purchases to kick-start the economic recovery, swelling the central bank's balance sheet to nearly $3 trillion.