This is an archived article that was published on sltrib.com in 2015, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

If you have been following the financial markets, you know that a zero percent interest-rate environment just had to end someday. That day is now here — as of Dec. 16, 2015, the Federal Open Market Committee (FOMC) (the branch of the Federal Reserve that controls monetary policy) started the upward move.

In Fed Chairman Janet Yellen's words, "This action marks the end of an extraordinary seven-year period during which the federal funds rates was held near zero to support the recovery of the economy from the worst financial crisis and recession since the Great Depression."

The FOMC raised the target range for the federal funds rate by 1/4 of 1 percent (to between 1/4 of 1 percent and 1/2 of 1 percent). (The federal funds rate is "the interest rate at which banks lend to each other overnight.")

This is not much of an increase at all, but enough to clear the air about the FOMC's view of the economy. It's finally on the mend after the financial crisis.

The FOMC changes monetary policy when its economic dashboard of indicators forecasts a sound economy on the horizon. And indeed, that's what led to the long-anticipated increase.

According to last Wednesday's Federal Reserve press release, since the FOMC's last meeting in October, "economic activity has been expanding at a moderate pace. Household spending and business fixed investment have been increasing at solid rates in recent months, and the housing sector has improved further; however, net exports have been soft. A range of recent labor market indicators, including ongoing job gains and declining unemployment, shows further improvement and confirms that underutilization of labor resources has diminished appreciably since early this year."

The outlook? "The [FOMC] currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will continue to expand at a moderate pace and labor market indicators will continue to strengthen. Overall, taking into account domestic and international developments, the [FOMC] sees the risks to the outlook for both economic activity and the labor market as balanced."

The FOMC will monitor inflation closely as time goes on before a next move, and is "reasonably confident" that inflation will rise to its 2 percent objective, according to the press release.

What's ahead? Only gradual increases: "The federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data."

The FOMC will determine "future adjustments to the target range for the federal funds rate," based on its assessment of "realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation." What will be measured? "Labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments."

The big question is what this means to the investor.

Since the FOMC has been planning a rise for quite a long time, it was "widely anticipated," according to Joseph H. Davis, Ph.D., Vanguard's global chief economist and global head of Vanguard Investment Strategy Group, the mutual-fund company. Davis does "not expect any material impact on financial conditions in the short term."

For bond investors, "higher rates should be a net positive for bond portfolios held over longer horizons, as any front-loaded capital losses should be more than offset by the reinvestment at higher yields over the investment horizon," added Roger Aliaga-Diaz, Vanguard senior economist. "We continue to expect long-term returns for broad diversified bond portfolios in the 2 to 3 percent range over the next 10 years."

As to equity markets, Aliaga-Diaz explained: "The gradual expected path of rate raises is consistent with our expectation that U.S. equity market valuations are not necessarily in dangerous territory. To the contrary, high equity valuations such as P/E ratios should be consistent with moderate rate increases and subdued inflation expectations. Our view of equity markets that are not fundamentally overvalued is consistent with long-term return expectations in the 6 to 8 percent rate range over the next 10 years."

As Davis said, the Fed's action is "an unequivocal positive for both long-term investors and for savers." That's good news.

Julie Jason, JD, LLM is a personal money manager (Jackson, Grant of Stamford, Conn.) and award-winning author.