Mr Powell in statements throughout the year, culminating with his recent Senate confirmation hearing, has been clear he sees little risk of inflation that would prompt the Fed to raise rates faster than expected, and takes weak wage growth as a sign that sidelined workers remain to be drawn into jobs. 

New data added evidence to that view on Friday. Employment in November grew faster than expected, but wage growth remained muted. The share of working age adults with jobs continued a steady, six-year recovery that is approaching its pre-crisis peak. 

Even with the unemployment rate at a 17-year low of 4.1 percent, “there's no sense of an overheating economy or a particularly tight labour market,” Mr Powell told members of the Senate Banking Committee, saying that the Fed should raise rates only gradually. 

Debate among Mr Powell's colleagues, meanwhile, has highlighted other risks if the Fed speeds its pace of rate increases. 

Some policymakers feel the central bank has already undercut its credibility by raising interest rates while inflation remains so weak. Others have noted that if the Fed continues raising short-term rates while long-term rates remain stalled, it could turn the shape of the bond yield curve upside down, a typical signal of recession. 

“If the Fed gets its paradigm wrong and sees inflation that ultimately doesn't materialise, and they take rates too far, then markets would feel aggrieved,” said Carl Tannenbaum, the chief economist at Northern Trust in Chicago, and a former senior risk official at the Fed Board. 

Other analysts are starting to see a potential dovish surprise when Powell takes over in February, the tax cuts could kick in, and the Fed stands aside.