Americans are on a 'treadmill of high inflation' and more rate hikes are likely, Fed's Daly says

San Francisco Federal Reserve President Mary Daly said Friday she expects the central bank will need to raise interest rates further, but joined her fellow policymakers in saying the pace and timing remain uncertain.

"My expectation is we're going to have to tighten policy further. Exactly when and how much is still to be decided because we just have to take all the variables that are coming in," Daly told CNBC's Steve Liesman during a live interview. "More is likely to be needed, and certainly ... I'm prepared to do that if that's what the economy calls for."

The remarks came the same day the Bureau of Labor Statistics reported that the U.S. economy added 165,000 jobs in October while the unemployment rate — the labor-market variable Fed officials focus on most — edged lower to 4.1%.

Those numbers were substantially better than Wall Street expectations. Job creation, in fact, was nearly triple the Dow Jones consensus estimate.

Daly called the report "good news for American workers," but noted the pressure inflation is exerting on household finances. Average hourly earnings rose 3.1% annually in October, but the September inflation rate as measured by the consumer price index was 3.7%.

"They see that they can get jobs, they continue to spend. They're not out of the game, but they are on a treadmill of high inflation," she said. "This has been high for too long, almost six years, and we're really starting to feel the burden of that spread everywhere."

The policymaker said she's not concerned generally about economic growth but worried about the persistence of inflation.

"The job market remains stable and solid, but not booming, and you see real wages falling because those wages are not really keeping up with inflation," Daly said. "I think that's the crux of this. Good news on the jobs front, not so clear that Americans are going to gain ground in the labor market."

The rate-setting Federal Open Market Committee in September increased the central bank's benchmark overnight borrowing rate by a quarter percentage point to a target range of 3.75%-4%.

However, the committee last week declined to follow up that hike with another move, saying it preferred to wait for "the accumulation of more information" before deciding its next move.

Daly will vote on the committee next year and said she still favors a gradual approach. Richmond Fed President Thomas Barkin said Thursday he also sees higher rates ahead but is unsure of the timeline.

"I was really supportive and completely thought that that was the right move to move in September," Daly said. "I also think that it was good to be on hold at the last meeting because the world is filled with uncertainty."