Cleveland Federal Reserve President Loretta Mester told CNBC on Friday the central bank could stop hiking interest rates this year if inflation doesn't rise.

The U.S. economy is "in a really good spot," said Mester, who was a voting member of the policymaking Federal Open Market Committee in 2018 but is not this year. "If we don't see inflation picking up and we see the labor market staying reasonably strong from where we are now, that may tell us we're not neutral."

"The economy is going to be telling us where we are," she added, indicating the Fed could later reconsider its rate hike projections.

The Fed last month raised its benchmark interest rate for a fourth time in 2018 and lowered its rate hike projection for 2019 from three to two. That helped fan a stock sell-off in which the Dow Jones Industrial Average and Nasdaq saw their biggest weekly losses in more than 10 years and the S&P 500 had its worst week since August 2011.

Fed chief Jerome Powell did leave the door open to other options for this year, emphasizing "data dependency" and saying if data do not hold up in 2019 the Fed may change course.

Mester joined "Squawk Box" moments before the widely anticipated December jobs report. The Labor Department report said nonfarm payrolls surged by 312,000 last month, crushing estimates of just 176,000.

President Donald Trump has repeatedly expressed frustration with the Fed's moves to raise rates, arguing the central bank could disrupt the U.S. economic recovery.

Several well-respected Wall Street voices, including widely followed economist Mohamed El-Erian and UBS' Art Cashin, have argued Powell was forced to go through with a fourth rate hike in 2018 due to the risk of appearing politically coerced. However, Powell has denied that the Fed's decision-making has been influenced by any political pressure.

Mester has previously stressed Fed rate hikes are based on economic data, adding the so-called "neutral rate" is a moving target and can vary over time.

WATCH: The full interview with Cleveland Fed President Loretta Mester