St. Louis Federal Reserve President James Bullard on Tuesday said recent strength in the U.S. labor market may not trigger faster price increases, a view that runs counter to investors' inflation fears currently pushing the stock market lower.

The U.S. stock market has plunged since employment data on Friday showed strong job growth in January as well as surprisingly fast wage increases. Investors now see a higher risk of inflation as well as faster rate increases by the U.S. central bank.

But Bullard, who does not have a vote on monetary policy this year although he participates in policy discussions, said inflation could stay low. Moreover, the Fed can be less aggressive about raising rates if inflation doesn't rise, he said.

"I caution against interpreting good news from labor markets as translating directly into higher inflation," Bullard told a conference in Lexington, Kentucky. "Let's wait and see what happens."

The Fed has been gradually boosting borrowing costs since 2015 and policymakers signaled in December they expected to raise rates three times this year. Investors expect the first hike of 2018 to come in March.

Bullard has been expressing doubt for months over how well economists understand what will ultimately lead inflation to make a sustained rebound. Inflation has been below the Fed's 2 percent target for most of the last six years.

However, he said recent gains in market-based measures of inflation expectations may give a signal of future inflation.

"The measures today are closer to being in line with the ... 2 percent inflation target, but remain a bit low," Bullard said.