New data shows that inflation ra but slowed down significantly in 2023.

AMNA NAWAZ: And consumers are still# hesitant to embrace the a theme that was consistent throughout# last year's strong economic performance.

For more on how we can use these latest# numbers to understand what might be ahead,## and how consumers are viewing the economy,# I spoke earlier today with Raphael Bostic,## president of the Federal Reserve Bank of Atlanta.

Mr. Bostic, welcome to the# "NewsHour."

Thank you for joining us.

RAPHAEL BOSTIC, President, Federal Reserve Bank# of Atlanta: Thank you.

AMNA NAWAZ: So let's jus Overall, consumer prices rose a little more# than expected in December.

Core pric excluding food and energy, also rose more than# expected.

What do those numbers say to you?

RAPHAEL BOSTIC: Well, today's CPI report has# not been as positive as some of the last couple.

But seeing some volatility in inflation is not# really a surprise to me.

The economy has been## very strong and robust over the last year, and# that resilience has really been a positive thing.## It's actually been stronger than I expected.# But that resilience also means that the pace## of inflation or the speed of it coming back# down to our target is going to be slower.

And so seeing some reports every now and then# that are going in the other direction is par## for the course.

And I'm expecting that things will# be bumpier as we continue through the next year.

AMNA NAWAZ: Most of that inflation# increase that we saw was due to higher## costs for both car insurance and also for housing.

Housing costs, in particular,# accounted for more than half of## the monthly increase in consumer# prices.

We are in, as a nationwide housing shortage.

So is the only way# to bring those increases RAPHAEL BOSTIC: So, yes.

I hear exactly the same thing.

And this is# a supply issue as much as a demand issue.

So## one part of affordability is having# enough income.

But in many markets,## Atlanta being one of them, the growth in# population has outstripped the growth in units.

And that's going to put up a pressure on# prices.

And so we need to see more supply.

AMNA NAWAZ: Now, the Fed has signaled that they're## done raising rates.

Do you be RAPHAEL BOSTIC: Well, soon -- soon means# different things to different people.

Look, my expectation is that inflation is going# to decli which means that we won't be in a position to# cut rates for quite some time.

My outlook has## us showing rates starting to fall in# the third quarter of this year.

But,## again, we will have to see how inflation# progresses in the next several months.

AMNA NAWAZ: Well, three days ago in a# speech, you did say that, as you mentioned,## inflation has come down.

You have mentioned you're# on t When do you expect that target to be# reached?

Is there any way to predict that,## given, as you said, it's not a linear path?

RAPHAEL BOSTIC: Well, we have models,# and My outside model on this says that we should get# to 2 percent in our measure bu t a lot's going to happen between now# and then.

So I don't put too much stock## in any of those longer-term issues.

And# I just try to keep an eye on where things are going month to month and try to just have# a clear understanding about where we stand.

If the economy comes in stronger and inflation# goes faster to our target, then I will be willing## to pull forward, perhaps, my willingness to cut.# But we will just have to see how things play out.

AMNA NAWAZ: I hear your note of caution.

I'm# curious if you can tell us more about where## you see that potential volatility.

Is it# domestically, turmoil around Is it globally with more instability# and two wars?

Where are you looking?

RAPHAEL BOSTIC: I'm looking# everywhere, to be honest.

You called out two things.

The# geopolit are a big problem.

We have seen just# in the last several days the cost of## shipping go up by a considerable amount# because of turbulence in the Middle East.

In the Southeast, we have seen storms that# have created historic levels of damage and## disrupted economies in significant ways.# And there's still uncertainty about the## progression of the virus.

As you know, we're# seeing more people get sick and tragically die.

And so all of those things will come into# play.

And depending on how they play out,## that will have a real implication# for the trajectory of the economy.

AMNA NAWAZ: Mr. Bostic, can I get your# take on this so-called vibe th is idea that consumer confidence# -- and we have seen this over the## last year -- has really lagged behind the# actual strength and recovery When you look at that, how# do you explain that gap?

RAPHAEL BOSTIC: Well, for me, I think it really is# th at prices are much higher than they were two# years ago.

And their wages did not go up as much.

And so that realization, that recognition is# really present in people's minds.

We all go to## the grocery store on a regular basis.

Gas was# much higher.

It's come down.

So that's not a## pressure point nearly as much.

As we start to# see more and more of goods get back to pricing## that is close to where it was before, or if# our incomes go up more strongly, I think that## that kind of negativity will likely dissipate,# and we will start to see the numbers evolve.

But human psychology is not# something that turns on a dime,## and it would really take time and# experience lived for those things to shift.

AMNA NAWAZ: And we did see, I should mention,# consumer confidence go up slightly in December.## But, overall, there's been concern that it# could become, that pessimism could become## sort of a self-fulfilling prophecy and# could potentially lead to a recession.

Do you still believe there could be a recession?

RAPHAEL BOSTIC: Well, there's always a probability# We spend a lot of time tracking people's# expectations about where the economy## is likely to go.

And I have been really# pleased to see that the American people,## by and large, have confidence that# inflation is going to get back to## 2 percent and that the economy will be able# to stand on its own and As long as we start to continue -- as long# as we continue to see signs like that,## I have every confidence that the economy will# be fine, growth will happen, businesses will## continue to hire and produce, and the quality of# life in this country will continue to improve.

AMNA NAWAZ: All right, that is the president of## the Federal Reserve Bank of Mr. Bostic, thank you so much# for your time.

Appreciate it.

RAPHAEL BOSTIC: Thank you so much for inviting me.