A top Federal Reserve official said he would set the bar very high for the central bank to stop short in its planned $600 billion in bond purchases, but that the Fed may need to begin considering a reversal of policy by year end.

The bar is very high for me, Kocherlakota said in an interview with the Wall Street Journal published on Monday. There would have to be a disorderly reaction of some kind in inflation expectations or in the behavior of the dollar.

We're talking about relatively extreme events, he said.

Kocherlakota, who rotates into a voting slot on the Fed's policy panel this year, said he threw his support behind the bond purchase plan after colleagues argued persuasively the policy would move monetary policy in the right direction even if it would not have a large impact.

He told the Wall Street Journal he did not know whether the Fed might stop short of buying the full $600 billion or end up buying more. He said, however, he would have supported the program even if he had known the economy would prove somewhat stronger than he had been forecasting.

Kocherlakota said he expects the U.S. economy to grow 3 percent to 3.5 percent this year, with inflation rising about 1.5 percent to 2 percent.

He said he expects the U.S. jobless rate to drop to close to 9 percent by the end of the year, but stay above 8 percent through 2012.

The Minneapolis Fed chief reiterated his argument that structural shifts in the economy had likely raised the level of measured unemployment that would be sustainable without generating unwanted inflation.

He said the level of unemployment that might trigger inflation was likely in a range of 6.5 percent to 8 percent, well above the 5 percent to 6 percent Fed forecasts released in November suggest is a more widely held view among policymakers.

He said that was not an immediate concern for policy, but that it might become a consideration by the end of the year. The government said on Friday that the jobless rate dropped to 9.4 percent last month from 9.8 percent in November.

Right now this debate over what the level is of structural unemployment is somewhat -- I don't want to say uninteresting -- but is not immediately relevant for policy considerations, Kocherlakota said.

If things go as I expect, then I think it's going to be really important toward the end of the year, toward the end of 2011, to have some notion of what this level of structural unemployment is, he said.

If the number is 8 percent ... and according to my forecast unemployment will be around 9 toward the end of 2011 and inflation is at 1.5 percent ... that's the point where you might think about exit, Kocherlakota added.

The Fed has held benchmark overnight rates near zero since December 2008. After pressing rates close to zero it bought $1.7 trillion in mortgage-related and government bonds. Then, in November, it launched the latest $600 billion bond-buying program, which has drawn heavy criticism.

Kocherlakota said the backlash against the program did not change his calculation of the plan's costs, which he called relatively small.

(Reporting by Tim Ahmann, Editing by Chizu Nomiyama)