Fed chair Jerome Powell is attempting something of a high-wire circus act as the central bank pushes forward with its average inflation targeting regime.

The big picture: He's trying to simultaneously raise inflation while keeping short-term interest rates low and stimulate the economy through unprecedented and extraordinary measures while convincing Americans the economy is doing well.

Driving the news: The Fed kept its policy rate unchanged on Wednesday but sharply ramped up its expectations for economic growth — while affirming that it does not plan to raise interest rates until after 2023.

• The central bank also curiously reworded the public statement accompanying its decision.

Why it matters: U.S. inflation expectations have shot up in recent months while unemployment remains incredibly high, a potentially devastating combination for the economy.

What we're hearing: "The Fed released its new framework last year and it’s showing that it means it," former Fed economist Claudia Sahm tells Axios.

• "Always in the past, expected inflation was what drove the Fed to say, 'Whoa, we’re going to ease up here and in fact might tap on the brakes.' That’s always been how the Fed worked."
• Now the Fed is "showing that it's not all about inflation, and it’s not about expected inflation. It’s about jobs and inflation and with the inflation, we have to see a sustained period of inflation above 2% before we’re going to pull back."

What's happening: That new framework is pushing investors and they're pushing market gauges of inflation like the 10-year Treasury yield to 1.74%, its highest in more than a year, and 5-year breakeven rates to their highest level in nearly 13 years.

• Consumers, seeing consistently higher food, gas and auto prices, as well as increasing mortgage and loan rates also are predicting rising inflation, with a recent New York Fed survey showing the highest consumer inflation expectations in seven years.
• Google searches for inflation have jumped to their highest since record-keeping began in 2008, according to Deutsche Bank research.

Yes, but: While Powell has been content to let longer-term interest rates, which correspond with consumer products like mortgages, rise higher, he has fixated on keeping short-term rates, which correspond with the cost of borrowing for banks and large financial institutions, low.

• By insisting that the Fed isn't even thinking about thinking about raising rates, yields on short-dated Treasuries fall because they are closely tied to Fed policy.

The bottom line: "They’ve masterfully navigated this meeting by sounding somewhat optimistic on the economy but staying dovish on the policy path," Subadra Rajappa, interest rates strategist at Société Générale, tells Axios.

• "If the Fed were to even suggest they’re hiking soon the market will quickly price in multiple hikes and that would be much more negative for the economy."