'It's a Big Moment for Japan': Fed's Bullard

Source: Federal Reserve Bank of St. Louis

James B. Bullard, St. Louis Fed President

The huge volatility in the Japanese market is not surprising given the aggressive monetary policies put in place in the country over the last six months, St Louis Federal Reserve Chairman James Bullard told CNBC.

"I wouldn't be surprised with that kind of action over that kind of timeframe that you're going to get some volatility," Bullard said Friday.

The policy, which includes pursuing quantitative easing as long as is needed to achieve a 2 percent inflation target, has led to a surge in Japanese stocks.

"It is a big moment for Japan," Bullard said. "Any time you see any market in the world go up by this amount in six months, you are bound to see volatility in the trading. More volatility if it was a stable market that hadn't moved at all."

Japan's stock market witnessed a second straight day of heightened volatility on Friday, swinging from gains of 3 percent to deep losses before bouncing back again, leaving traders puzzled as to what was going on in Asia's biggest stock market.

"I'm sure some traders might be nervous over 'has it been overextended'. It is very sensitive, which way the market is going to go, which way the policy is going to go for Japan," Bullard said.

—By CNBC's Jenny Cosgrave; Follow her on Twitter @jenny_cosgrave.