Cleveland Fed President Loretta Mester said in a speech on Thursday that she expected the U.S. economy to continue to expand and the U.S. labour market to strengthen despite volatility in financial markets and further drop in oil prices.

"Solid labour market indicators, including strong payroll growth, and healthy growth in real disposable income, suggest that underlying U.S. economic fundamentals remain sound," she said.

Mester noted that the Fed should continue to hike its interest rate gradually.

"While the actual path the fed funds rate follows will depend on the economic outlook, and thus, will be data dependent, my current view is that economic conditions will evolve in a way that will warrant rates moving up gradually over time to more normal levels," Cleveland Fed president said.