Federal Reserve officials are set to release updated forecasts next week, reflecting optimism about the economy’s prospects.

Despite the positive outlook, they are expected to keep one more rate hike as a possibility.

Economists believe that the Fed will maintain the current interest rate range of 5.25% to 5.50% at its upcoming meeting in September. 

The key question is how policymakers will adjust their forecasts, given the strong economic data since June.

Most analysts, including Matthew Luzzetti of Deutsche Bank, think the Fed won’t raise rates further, although they may not explicitly state this. Declaring an end to tightening could ease financial conditions, potentially sparking inflation, which the Fed is trying to control.

Economists anticipate that the Fed’s GDP forecasts for this year will be upgraded significantly, given the strong economic growth in the first half of the year. The labor market is expected to be viewed more optimistically, with a low unemployment rate driven by more people seeking employment.

Inflation projections for this year are expected to be lower than initially forecast in June, considering the decline in the personal consumption expenditures price index. 

However, future rate cuts may depend on how inflation progresses toward the Fed’s 2% goal.