Atlanta Fed President Raphael Bostic said Wednesday the Great Recession was so deep that people don’t trust long-term investments.
“There is a psychology going on here, where the Great Recession was so deep and it scarred people so significantly that they are reluctant to trust in long-term investments,” Bostic said in a wide-ranging interview on CNBC’s “Squawk Box.”
Regarding politics, Bostic said it appears U.S. businesses were optimistic before President Donald Trump and didn’t change their plans when he was elected.
They took a “wait and see attitude,” he said.
Bostic also said he wouldn’t “anchor” on the Trump administration’s target of 3 percent GDP growth. Trump pledged to drive U.S. economic growth above 3 percent through tax reform, deregulation, and other pro-business policies. Many economists expect growth of around 2 percent, however.
“If it winds up at 3 [percent] at the end of the calendar year, that’s great. But I want us to have an environment where business can make a profit and they can serve customers and growth will follow,” he said.
He spoke before the Federal Reserve releases at 2 p.m. ET the minutes of its July meeting when central bankers left interest rates unchanged. In the minutes, investors will be looking for any new details on when and how the Fed might begin reducing its $4.5 trillion balance sheet.
Bostic said he’s worried about inflation and said the Fed doesn’t have a single model that explains why inflation is so low.
In March, Bostic was tapped as new president of the Atlanta Federal Reserve bank after Dennis Lockhart retired. Bostic is the first black regional bank president in the central bank’s history.