The Federal Reserve's monetary policy effect on financial markets and investors

This paper explores the short and long-term effects of the Federal Reserve’s post-recession monetary policy. Since 2009, in the wake of the Great Recession, the Federal Reserve took unprecedented action by lowering the federal funds rate to zero. This zero-interest rate policy persisted until late 2015, when the Federal Reserve increased rates for the first time in 7 years. While rates have increased slightly, the economy continues to operate in a low interest rate environment. By keeping the federal funds rate near zero for such an extended period of time, the Federal Reserve precipitated significant effects on the economy and investors. This paper analyzes the short-term, intermediate, and long-term effects of the Federal Reserve’s post-recession monetary policy on the financial markets and institutional investors; specifically, we examine the fed funds rate effect on the economy, equity markets, interest rates, private equity industry, and investor portfolios.