The Federal Reserve is very likely to increase the base rate in the following month, as many insiders and expertises point out that the Fed wants to stay away from the negative interest rate zone and create space for the use of the monetary policy in the future possible economic crisis.
The current low interest rate environment is difficult for any central bank to conduct more interest cuts to provide effective expansionary monetary policy, as the current base rate is very close to zero, and the real rate is almost negative. Although some banks start to introduce the negative deposit rates, which could help to encourage more spending and investment, when a crisis hits the economy, bank runs become highly likely and the price of precious metals can rise sharply. Even worse, the previous quantitative easing programmes create incredible amount of cash in the economy, but which is inactive due to the market's conservative action, could blow out and damage the current monetary system. Therefore, the US Fed wants to increase the base rate in order to ensure the banks in the US will not consider to introduce negative interest rates. Moreover, when the real interest rate is above certain range, the US Fed could reduce the base rate again when the US economy is in trouble. However, the concern about increasing the rate now may increase as people may think that increasing the short term rates could slow down the US economic growth and reduce the current financial activities. I think that the move to increase the rate is a way to reduce the future risk by sacrificing the possible growth potential in the future.
In general, we could see that the tools that a central bank could use to stimulate the economy are very limited as the US Fed has to increase its base rate to create space for its future rate cut; and when a new crisis hits our economy, it seems necessary for our central bank to invent new monetary tools to help stimulate the economy.
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