Our economy may be warming up as spring approaches. And that means all eyes should turn to Janet Yellen and the Federal Reserve Open Market Committee to see if a rate hike may be here in time for warmer weather.

This week we learned the Consumer Price Index shot up higher than expected, meaning people are paying more for goods and services. This is an important factor in predicting inflation. In January, the CPI increased 0.55 percent since December and 2.5 percent higher than this time a year ago. The core CPI, which removes the cost of food and energy from the numbers, increased 0.31 percent in one month — the biggest single month gain since 2006. That's significant.

If you look at the last three months of CPI increases and project that average across the rest of 2017, we're on pace to see the CPI rise more than 4 percent this year. That's surely enough to drive inflation higher and weigh on the minds of the members of the Federal Open Market Committee, which sets target interest rates at the Federal Reserve.

It's not just consumer prices showing signs of warmth. Retail sales increased 0.4 percent from December to January, with broad-based improvements such as higher sales at sporting goods stores, electronics outlets, restaurants, department stores and gas stations, among others. The Empire State manufacturing index also showed improvement this week, up to a +18.7 in February from a +6.5 in January, with more orders, shipments and employment in the past month.

What does this all mean for the mortgage business?

Fed Chair Janet Yellen and her colleagues may feel added pressure to raise interest rates at their March meeting. Goldman Sachs is still predicting three rate hikes this year, and upped its chances for an increase in March to 30 percent from 20 percent. A strong employment number on March 10 would add more fuel to the fire.

Remember, the Fed has a dual mandate to foster full employment and keep annual inflation rates at about 2 percent. If we keep getting good jobs reports, and inflation forces keep rising, the Fed will likely accelerate its plans to raise rates from historic lows and bring the economy back to a normal interest rate environment. We've operated for almost an entire decade now with low rates and artificial monetary stimulus keeping rates in the basement. It can't stay that way long-term.

Yellen faced Congress this week in hearings on Capitol Hill. In usual fashion, she did not commit to many specifics. Overall, Yellen suggested the committee sees an improving economy, in part because of the Fed's low-rate policies, but rate hikes will happen as data shows the low rates are no longer needed. Her tenor indicated rate hikes will be less about slowing down a hot-rod economy (which we do not have) and instead will happen when the low-rate stimulus is clearly no longer necessary to support healthy growth.

"At its meeting that concluded early this month, the committee left the target range for the federal funds rate unchanged but reiterated that it expects the evolution of the economy to warrant further gradual increases in the federal funds rate," Yellen said. "Waiting too long to remove accommodation would be unwise, potentially requiring the FOMC to eventually raise rates rapidly, which could risk disrupting financial markets and pushing the economy into recession. Incoming data suggest that labor market conditions continue to strengthen and inflation is moving up to 2 percent."

She added: "Monetary policy is not on a preset course. FOMC participants will adjust their assessments of the appropriate path for the federal funds rate in response to changes to the economic outlook and associated risks as informed by incoming data."

Translation: As data shows the economy standing on its own two feet, the Fed will raise rates. Not before, not after.

Coming this spring

That's why watching data this spring will be so important. Keep an eye on jobs reports, the price indexes, output indicators and other key metrics. The Fed looks more hawkish than it has been and will be ready to raise rates, if and when the numbers make sense.

This will add to the heartburn refi lenders are facing, especially after refi applications dropped another 3 percent last week. Refinance applications are now half the number we saw this time a year ago.

However, a slow, steady rising rate environment can be good for home buyers and their lenders. How so? It is evidence of a stronger economy, which means people are working and earning more. It could also help slow price appreciation of existing homes, making it more affordable to buy.

This week, average mortgage rates were little changed, according to Freddie Mac's weekly survey. However, Freddie's economists noted an unusual trend for the first few weeks of 2017.

“For the last 46 years, the 30-year mortgage rate has been almost perfectly correlated with the yield on the 10-year Treasury, but not this year," Freddie reported. " From Dec. 29, 2016, through today, the 30-year mortgage rate fell 17 basis points… In contrast, the 10-year Treasury yield began and ended the same period at 2.49 percent. While we expect mortgage rates to fall into line with Treasury yields shortly, this just may be a year full of surprises."