Federal Reserve chair Janet Yellen said she expects interest rates to rise in "the coming months" if the US economy continued to improve.
Speaking at a Q&A session at Harvard University, the Fed chair said gradual rate rises would be appropriate.
"If the labour market continues to improve, and I expect those things to occur ... in the coming months such a move would be appropriate," she said.
The central bank meets on 14-15 June to discuss raising rates.
The Fed raised interest rates by 0.25% for the first time in nine years last December and has left them unchanged since.
"We saw relatively weak growth last year, but growth looks to be picking up," Ms Yellen said.
On Friday, the US Commerce Department revised its estimate for first quarter GDP growth up to 0.8%, from the sluggish 0.5% originally estimated.
Unemployment was 5.5% in May - a level the Fed regards as good, although Ms Yellen did acknowledge that many part-time workers were still looking for full-time employment.
The Fed also wants to see US inflation rise to 2%.
A series of hawkish speeches and talks from Federal Reserve members throughout the week has increased the likelihood of a rate hike in June.
"Gold could test $1 200, a scenario that will grow more likely if the market consensus around Fed tightening builds", said Jordan Eliseo, Sydney-based chief economist at trader Australian Bullion Company.
Investors are focused on Yellen’s speech for any new signals that the US central bank is close to raising interest rates, after numerous Fed officials in recent weeks have talked up expectations that an increase may be near.
"There’s only a 20 percent chance she is going to comment on the economy or the outlook for monetary policy", said Ned Rumpeltin, European head of foreign-exchange strategy at Toronto Dominion Bank in London.
By BBC NEWS