Romans 2:28 For he is not a Jew, which is one outwardly; neither is that circumcision, which is outward in the flesh: 29 But he is a Jew, which is one inwardly; and circumcision is that of the heart, in the spirit, and not in the letter; whose praise is not of men, but of God.
The Jews historically saw themselves as the people of God. For a time, God did show them favor over other nations. Often things within the Old Testament were a type or shadow of those in the New Testament. Paul here in these verses was calling those who were the people of God by the name Jew. This term was not an outward description. It did not depend upon bloodline or law or ordinances etc….. Paul is showing us that the people of God are those who have had those barriers that would keep them from following God removed. God circumcising those away and revealing Himself to His people. This change will not come by the law but by the Spirit of God.
John 17:17 Sanctify them through thy truth: thy word is truth.
1 Peter 1:2 Elect according to the foreknowledge of God the Father, through sanctification of the Spirit, unto obedience and sprinkling of the blood of Jesus Christ: Grace unto you, and peace, be multiplied.
1 Corinthians 6:11 And such were some of you: but ye are washed, but ye are sanctified, but ye are justified in the name of the Lord Jesus, and by the Spirit of our God.
Those who are of God are manifest so by the very power of God.
John 1:12 But as many as received him, to them gave he power to become the sons of God, even to them that believe on his name:
One recurring theme in Romans is that in the process of salvation God is the primary actor. God does not wait for man to act. In His time of choosing, God saved in the blood of His Son. In the same way God in the time of His own choosing will reveal this work in the heart of all His and through the power of the Holy Spirit, not by the law, these are circumcised in the heart. All of this is by the power of God.