The case for rate hikes has "strengthened in recent months", chair of the US Federal Reserve Janet Yellen has said.
Speaking at Jackson Hole, the Fed chief said: "In light of the continued solid performance of the labour market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months. Of course, our decisions always depend on the degree to which incoming data continues to confirm the committee's outlook."
Yellen said there had been sufficient economic growth to generate improvement in the labour market, backing up her position.
"Looking ahead, the Federal Open Market Committee (FOMC) expects moderate growth in real gross domestic product, additional strengthening in the labour market, and inflation rising to two per cent over the next few years," she added.
"Based on this economic outlook, the FOMC continues to anticipate that gradual increases in the federal funds rate will be appropriate over time to achieve and sustain employment and inflation near our statutory objectives."
Investors were looking ahead to the meeting for clues over when the Fed may hike interest rates, with speculation a hike could come later this year.
David Morrison, senior market strategist at Spread Co, said Yellen's speech was "undeniably hawkish".
"She said the case for a rate hike has strengthened in recent months," he added. "Also, the US economy continues to expand and has reached maximum employment with price stability. This saw the dollar pop higher initially and precious metals fall. Nevertheless, she anticipates that gradual rate hikes are appropriate."
However, Michael Hewson, chief markets analyst at CMC Markets, said that while the main headlines are hawkish, Yellen's "not really saying anything new".