Michael McKee (2:34)

Well, what do you think that means for the economy?

Raphael Bostic (2:36)

Well, I think it means that the things that we've seen for the second half of 2025 we will continue to see through 2026. And you know, I've talked to a lot of folks over the last six weeks or so and they said we think our experiences in October, November, December are likely to move on. And then there are some reasons why they think it might actually get stronger. You know, the tariffs, people have gotten used to those and so those effects will have run through by the middle of the year. We see some of the stimulative aspects of the tax bill last summer, those coming on board. And if consumers start to feel like there is more certainty, then I think businesses think there's some upside potential in the economy.

Michael McKee (3:17)

Well, this last week we've gotten a lot of bad news on the employment front with ADP and Challenger and the other numbers that have come out. Does any of that you don't have another meeting to vote at, but does any of that give you pause about the Fed pausing at this point?

Raphael Bostic (3:32)

For me, no. You know, I think we've been in a situation where inflation has been too high for too long and by many readings it's been kind of marking time, has been at a plateau well above our target for the better part of two years. That's not acceptable. And for me, I think we can't lose sight of the inflationary concerns. The labor market is very turbulent right now and some of it is because there are some big structural things that are happening in the economy. You talk about when I talk to businesses, they're reluctant to hire entry level people at the same rate ways that they did before because they think things like I can replace that and they can deploy resources for other things. And I'm hearing that kind of reticence. There's also the reality that during the pandemic a lot of companies ramped up because the demand ramped up and they've been slower to rightsize. We see a bunch of that right. Sizing happening as well. And then we have issues around the labor supply and whether the immigration shifts are going to be temporary or permanent. And if they're permanent, then we're going to have a lower steady state job creation. So for all those reasons, I think it's very hard to to a clear statement. And then of course we don't have a jobs number today. Right. So we're not getting the data in a timely, timely basis. My team tells me it'll be April or May before we start to be able to draw clear signals from, from the data to really understand what's going on.

Michael McKee (5:00)

Yeah, we wanted to wish you a happy non jobs day. You started a long and varied career at the Fed in 1995. Since then, what have you learned about the economy and about inflation?

Raphael Bostic (5:14)

Well, I think for economy, one thing that is true is that it is a very complex economy is very large and to understand it you really have to get out and see all parts of it. And one of the things that's been great in my role here is I've had a chance to do that. I think it's given me a deeper understanding of just how people engage and experience the economy and how they make decisions to move it forward. In terms of inflation, you know, what I've learned is that we really don't want to have inflation. Once inflation gets entrenched in people's minds, it changes how the economy evolves. And it's one of the reasons why I think that we need to keep our policy in a restrictive posture so that we get inflation back to 2%. That's paramount. High prices and the prospect of rising prices really do have a lot of families on the edge. And I mean you all have reported a lot about the K shaped economy. There are lots of families that are feeling very precarious right now and that's a source of concern.

Michael McKee (6:08)

Do you think the economy is becoming more K shaped?

Raphael Bostic (6:11)

You know, I don't know more. I mean, it's been that way for a while. Just before the pandemic, I had been talking about this and we were trying to find some metrics to really detail how there's a split. I used to call it the barbell economy where either you were at the high end or at the low end. The case shape is the same thing. What I know is that there are a lot of families that are precarious and are feeling very uncertain about their prospects for the future and the prospects for their children for that matter. And that concern I think does underlie a bit of the lower and the low consumer confidence that we continue to see being reported. And what we'll need to do is really give people reasons to optimistic to show them where the new jobs are coming from and show them how they get the skills to compete for it.

Michael McKee (6:56)

Well, this week Treasury Secretary Bessant said the Fed has lost the confidence of the American people. Do you think you have lost the confidence of the American people in your district, do you hear people raising questions about that?

Raphael Bostic (7:09)

That's not been my experience. As I go around the 6th district, people tell me we're grateful for what you're doing. You have a very hard job and we want you to be as data dependent and as open to information so you can make the best judgment that you, that you can. Look, the world is very complicated. It's actually more complicated today than it has been my whole time here. So what I think most people understand that and they know that we're doing the best job that we can under very difficult circumstances.

Michael McKee (7:37)

Well, you have a unique perspective because when you took office, the Atlanta fed in 2017, you were the first black president of a regional Fed bank. Looking back now and hearing the criticism that we get from Washington, do you think the Fed was too woke and perhaps the inclusive employment idea was a mistake?

Raphael Bostic (7:58)

I don't think so. I. Look, what we have was, is an economy that needs to work for everyone. And if we're not mindful about the ways that the economy is not working for people, then our maximum employment outcome is going to be lower than it can be. And it doesn't serve the American people as well as it could. So I think the focus on every American and every American's experience is exactly the thing that the Federal Reserve needs to be doing that's different than saying that that is unduly influencing our policy decisions. And you know, I will say through this whole episode, the whole time I've been here, you can look at it. The market predictors and the market projections, they in many instances were more extreme than ours. Right. And so I actually think we've been doing the best that we can and we've been data dependent the way we've been for 100 and some odd years. So I don't take on board those arguments.

Michael McKee (8:55)

Well, the new chair designate, Kevin Warsh says the Fed needs regime change. What does that mean to you?

Raphael Bostic (9:01)

I have no idea. You're going to have to ask him what that means. Look, I think we definitely need to be data dependent. Our bank has really taken on board the notion that we need to go out and engage and talk to business leaders, find out how they're engaging with the business, how they're making decisions. And that combination we have found to give us the best perspective on how the economy is performing. I don't think that we should change from that. I think we might need to even lean in more to those non official data sources as the economy is changing. So rapidly because those are all looking backwards and we need to be looking forward.

Michael McKee (9:38)

Well, he's been very critical of what he calls the Fed's mission creep. Does he have a point?

Raphael Bostic (9:44)

I actually don't even see the mission creep argument. Like for me, on the banking side, for example, our job is to make sure that every bank that's alive today is alive tomorrow. And so we need to make sure that banks are thinking about the risk risks that could cause them to need to deploy capital in ways other than in loans. And so having conversations about those things I think is fully appropriate and we should be doing that. We don't tell banks where to lend. I've never told the bank, don't do a loan or don't do that sort of thing. And my examiners don't as well. I think we are asking prudent questions to make sure that financial sector business leaders are aware of trends that could be introducing or estimate Mexico War also.

Michael McKee (10:25)

Says that he wants to shelve QE and significantly shrink the balance sheet and perhaps go back to a scarce reserves regime for managing the interest rates of the country. Could he do that? Would that be a good idea? Or how hard would that be?

Raphael Bostic (10:43)

So I think it's doable to me. I was not at the Fed when we, when the decision was made to go from the scarce reserves to an abundant reserves regime. I do know there were tensions and a lot of volatility to happen in the scarce reserve environment. And so if you were going to move back to that, I would hope that there'd be a discussion about how to mitigate that volatility. Because so much of what we've done is just to make sure there's liquidity in the marketplace. And that liquidity is actually important to make sure that consumers and businesses are not worrying. Can we just worry about is this a good decision as opposed to whether I can execute on the good decision that leads to a different kind of allocation of capital is not helpful.

Michael McKee (11:24)

Tell me about Jay Powell and what he means to the Fed.

Raphael Bostic (11:28)

Jay has been great. He's a colleague. I consider him a friend. Very open and very transparent. And he's led the institution. He's been at the institution for a long time, through a lot of significant periods. I think his legacy will be quite positive. And, you know, I'd be sad to see him leave the board if that's what he chooses to do. But it's been a great relationship for me with him and it's been my pleasure to serve under him.

Michael McKee (11:54)

Do you agree with the sentiments he showed when he made his video a couple of weeks ago.

Raphael Bostic (12:00)

So I'm not going to talk about the specifics of the legal action from the Justice Department. What I would say is this. It is essential that the Fed performance duty, mindful to its charge, which is stable price and maximum employment, to really focus and create long term stability and predictability in the US Economy. And if you want to call it independence or whatever you want to call it, you can do that. But that's the charge, and we need to stay true to that. Even when people with different horizons and different objectives, executives have their views about what we want to do.

Michael McKee (12:38)

There were questions about the Fed and its ethics rules. You ran into some problems, as did others with those. Was that the rules or was that the individuals who created the problems?

Raphael Bostic (12:50)

Well, you know, individuals make the rules. I will say for me, I thought I was doing the right thing and I found out that I wasn't. So once I discovered that I didn't, I wasn't doing that in the reporting side, then I changed them and I changed our rules. I want to make sure that no one goes through that at all. And I was grateful that the IG report validated that I wasn't using insider information. And so, to me, I think we need to make sure the rules are clear and they draw bright lines so that laypeople can come in and use them in ways that allow them to avoid the challenges that I have. And then, you know, there may be some people that have problems, but that's not what I've seen in terms of my experience.

Michael McKee (13:36)

Well, last question. What would you tell Donald Trump if you had the opportunity about Jay Powell and about the Fed?

Raphael Bostic (13:44)

I'd say Jay's trying to do the best that he can. He's a smart man, he understands markets, and if you want him to succeed, you should let him succeed.

Michael McKee (13:56)

The Fed itself, do you think it is under threat from this administration?

Raphael Bostic (14:00)

Threat? I don't know. What I would say is my whole time here, and I think that most of the history of the Fed, there have been people who thought the Fed should do other things and, and talked about that and called them out. This is another one of those times. And we need to be mindful and we need to be solid and resolute to understand that that's part of that comes with the territory. And with that territory, then requires our strength and our, our resoluteness to stay focused on what we've been asked to do.

Michael McKee (14:36)

Rafael Bostic, thank you very much for joining US President for another couple of weeks. Atlanta Fed.