PALO ALTO, Calif. (Reuters) - The Federal Reserve has interest rates right where they should be, but should start trimming its massive balance sheet in the second half of the year, St. Louis Federal Reserve Bank President James Bullard said on Friday.

FILE PHOTO: St. Louis Federal Reserve President James Bullard speaks at a public lecture on "Slow Normalization or No Normalization" in Singapore May 26, 2016. REUTERS/Edgar Su/File Photo

“We’ve delayed a little bit too long in reducing the size of the balance sheet,” Bullard said in an interview with Reuters near the Stanford University campus, where he is attending a conference on monetary policy.

The Fed should first communicate its approach and then begin allowing the balance sheet to shrink “maybe sometime in the second half of the year,” he said, adding that the decision on the timing would be up to Fed Chair Janet Yellen.

The Fed has raised rates three times since the Great Recession, but left them unchanged at its meeting earlier this week. Strong jobs growth in April, reported earlier on Friday, has added to investor confidence that the central bank will raise rates again at its next policy-setting meeting in June, a move that Bullard said he would not necessarily oppose.

“The current rate is reasonable, given the current situation,” Bullard said, noting that the pace of year-over-year jobs growth has actually eased in the last couple of years, and there are no signs that inflation threatens to surge above the Fed’s 2-percent target.

Most Fed officials expect the Fed would need to raise its short-term benchmark rate two more times this year, and three times next year.

Bullard, who does not have a vote on the Fed’s policy committee this year, said that he would not balk at another rate hike: “If they want to go one more time, that would be fine.”

But, he added, reiterating an argument he has been making for the past year, “what I do oppose is the idea that we are 200 basis points off... the evidence is just not there.”

Instead of focusing on raising rates, Bullard said, the central bank needs to make progress on shrinking its $4.5 trillion balance sheet, in part to give it more policy flexibility in the face of a next shock or recession.

Fed officials have signaled they may take action at the end of this year or perhaps early next year.

Bullard wants the Fed to move faster.

“We should have gotten going on this a while ago,” he said.