(CBS) – Here in Chicago signals came Friday that major economic changes could be coming soon.
Federal Reserve Chair Janet Yellen spoke at a luncheon, saying the Fed likely will raise its benchmark rate later this month.
CBS 2’s Vince Gerasole reports on what this means to your wallet.
Steven Cook is a stylist with a dual read on his local economy.
Business is good, but the frequency of client visits lets him know some still hold back.
“I feel like people don’t feel exactly stable,” he says.
Yellen says the U.S. economy has shown “great improvement.” Unemployment down to 4.8 percent is considered healthy, and inflation inching upward towards 2 percent is optimal. Now, the Fed is ready to make some changes.
“We currently judge that it will be appropriate to gradually increase the federal fund’s rate,” Yellen said Friday.
Nearly a decade ago, when the financial crisis began, interest rates dropped to historically low levels, to encourage people to buy homes and businesses to borrow and expand.
A quarter-point increase is expected this month, with two more by year’s end. It would make new home purchases slightly more expensive, and let businesses grow at a reasonable rate.
“Those increases would keep the economy from significantly overheating,” Yellen said.
Cook worked hard during the country’s economic downturn, and is also an example of a country bouncing back. “I’m in a good place,” he says.
Yellen’s remarks are a strong indication interest rates will rise, but it won’t be official until a Fed committee meets to make the final decision in Washington on March 14 and 15