Federal Reserve Chairman Jerome Powell and his colleagues have made an important shift in their strategy for dealing with inflation in a prelude to what could be a more radical change next year.

The central bank has backed off the interest rate hikes it had been delivering to avoid a potentially dangerous rise in inflation that economic theory says could result from the hot jobs market. Instead, Powell & Co. have put policy on hold until subpar inflation rises convincingly.

“The Fed is evolving to a 'whites-of-the-eyes' approach in terms of inflation'' under which it won't hike rates until price rises accelerate, said Stephen Stanley, chief economist at Amherst Pierpont Securities LLC.