The Federal Reserve should keep alive its asset purchase programs beyond the first quarter of 2010 to give policy-makers more flexibility if the economy took another turn for the worse, a senior Fed official said on Sunday.

I would just like to keep them active at a very low level. It would give the Fed the option to react if the economy weakened, St. Louis Federal Reserve bank James Bullard told reporters after his speech at an event organized by Princeton University students in New York.

When you are trying to think how the economy might evolve, it could be that the economy comes in very strong ... or it could go the other way. There is a lot of uncertainty. I'd hate to get the feeling that the Fed is saying our work is done. We need a policy that can react either way, Bullard said.

The Federal Reserve cut interest rates to near zero last December and has kept them there since. At its last policy-setting meeting the central bank reiterated its pledge to keep interest rates extraordinarily low for an extended period.

Bullard said it could be helpful to have a discussion on what the term extended period means.