WASHINGTON (Reuters) - U.S. Secretary of State John Kerry suggested on Thursday that the United States is drawing closer to imposing more sanctions on Russia by saying time was running out for Moscow to change its course in Ukraine.

In unusually blunt comments, Kerry accused Russia of using propaganda to hide what he said it was actually trying to do in eastern Ukraine: destabilize that region and undermine next month's planned Ukrainian elections.

"The window to change course is closing," he told reporters in a hastily arranged appearance in the State Department press room, repeating U.S. threats to impose fresh sanctions if Russian President Vladimir Putin does not alter his policy.

"If Russia chooses the path of de-escalation .. all of us will welcome it. But if Russia does not, the world will make sure that the costs for Russia will only grow," he said. "It will be an expensive mistake."

Under an accord signed by Russia, Ukraine, the United States and European Union in Geneva last week, illegal armed groups are supposed to disarm and go home, including rebels occupying about a dozen buildings in the largely Russian-speaking east.

However, the rebels have shown no sign of retreating. U.S. President Barack Obama blamed Russia for failing to carry out the Geneva deal and said he was ready to impose new sanctions.

"As President Obama reiterated earlier today, we are ready to act," Kerry said.

(Reporting By Arshad Mohammed; Editing by Sandra Maler)