LEXINGTON, Ky. (Reuters) - The U.S. labor market is at full strength and the Federal Reserve needs to be on a path of gradual interest rate increases, Cleveland Fed President Loretta Mester said on Thursday.

"It seems like a gradual increase from a very low interest rate that we are at now is pretty compelling to me," Mester told reporters without saying whether she would support an increase at the Fed's policy meeting later this month.

(Reporting by Jason Lange in Lexington; Editing by Chizu Nomiyama)