James Bullard, president and chief executive officer of the Federal Reserve Bank of Saint Louis, made clear Monday that the Federal Reserve will take a fine-tuning approach to its second round of quantitative easing, or QE2, by adjusting the program up or down by small amounts in response to data flow and to advance its own policy aims.

"Getting to the next meeting — looking at how the data is coming in, looking at how the forecast has changed and make a judgment on going forward," Bullard told CNBC TV. "That is how I would like to approach this quantitative easing program."

Bullard noted that the last Federal Open Market Committee policy statement contained a regular review clause for that reason.

"For me, it is very much reviewable and changeable," he said of QE2. "People talk about QE3 and QE4 — what they have in mind when they say that is that we're going to announce some other big number at some point down the road."

Bullard said that he's sees QE2 as a continuous process.

"You could make minor adjustments as the data comes in," he said. "Then you get away from this idea that you are adopting policies on a one-off manner. Instead you are operating policy according to a rule or a quasi-rule which is informed by the judgment of the committee."

Bullard said, as a general rule, monetary policy was bound to be a more effective stimulus tool than fiscal policy, which was inevitably complicated by expectations.

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