×

Great Recession so deep that people don't trust long-term investments, Atlanta Fed president says

  • "The Great Recession was so deep and it scarred people so significantly that they are reluctant to trust in long-term investments," Raphael Bostic tells CNBC.
  • Bostic also says he wouldn't "anchor" on the Trump administration's target of 3 percent GDP growth.

Atlanta Fed President Raphael Bostic said Wednesday the Great Recession caused people to distrust 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.

Raphael Bostic
Rich Pedroncelli | AP
Raphael Bostic

"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.

Bostic said he's worried about why inflation is so low and said the Fed doesn't have a single model that explains why.

The Federal Reserve at 2 p.m. ET releases 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.

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.

Prior to the Fed, Bostic served an assistant secretary in the Department of Housing and Urban Development under former President Barack Obama.

He is not a voting member of the Federal Open Market Committee, but will be in 2018.

WATCH: Atlanta Fed CEO: Our models show economy 'much stronger' in second half