CNBC Transcript: Atlanta Federal Reserve President Raphael Bostic Speaks with CNBC's Steve Liesman Today

The following is the unofficial transcript of an EXCLUSIVE CNBC interview with ATLANTA Federal Reserve President Raphael Bostic and CNBC's Steve Liesman on CNBC's "Squawk on the Street" (M-F 9AM - 11AM) today, Thursday, May 24. Watch video of the interview on CNBC.com here!

References must be sourced to CNBC.

CARL QUINTANILLA: STEVE LIESMAN IS IN DALLAS THIS MORNING WITH ANOTHER IMPORTANT INTERVIEW. HEY, STEVE.

STEVE LIESMAN: GOOD MORNING. CARL. HERE WITH RAPHAEL BOSTIC, ATLANTA FEDERAL RESERVE PRESIDENT AT THE DALLAS FEDERAL RESERVE CONFERENCE ON DISRUPTION AND TECHNOLOGY. MR. BOSTIC, LET'S TALK ABOUT THE NEWS THAT'S OUT THERE. HOW DOES THIS PLAY INTO MARKETS AND THE ECONOMY? THIS IDEA OF THIS VERY IMPORTANT SUMMIT BEING OFF NOW.

RAPHAEL BOSTIC: I THINK IT'S GOING TO BE A SURPRISE TO EVERYONE. IT'S A SURPRISE TO ME -- I DIDN'T EVEN KNOW THAT THIS WAS A POSSIBILITY. AND I THINK IT WILL HAVE IMPLICATIONS FROM A CERTAINLY, UNCERTAINTY PERSPECTIVE. THERE'S JUST A LOT OF THE BUSINESS LEADERS I TALK TO, DON'T KNOW ABOUT WHERE POLICY IS GOING TO BE AND WHERE IT'S GOING TO LAND. AND I THINK THIS WILL - THIS HAS THE POTENTIAL TO ADD TO THAT IN THAT THESE GEOPOLITICAL RISKS REALLY DO HAVE IMPLICATIONS FOR HOW BUSINESS WILL TAKE PLACE.

LIESMAN: YOU'VE TALKED A LOT ABOUT THE UNCERTAINTY AROUND TRADE. THAT SHOWED UP IN THE MINUTES YESTERDAY - I WANT TO SAY TWO OR THREE TIMES. THIS IS THE IDEA OF THE UNCERTAINTY SURROUNDING TRADE, IN ADDITION TO THE UNCERTAINTY SURROUNDING GEOPOLITICS. THIS IS AN ISSUE AT THE FOREFRONT FOR THE FED RIGHT NOW.

BOSTIC: IT DEFINITELY IS. YOU KNOW, IS WHEN I TALKED TO BUSINESSLEADERS, I WANT TO KNOW WHAT INVESTMENTS THEY'RE GOING TO MAKE LONG-TERM THAT ARE GOING TO TRANSFORM THEIR PRODUCTIVE CAPACITY. AND WHEN BUSINESSES DON'T KNOW WHAT THE RULES ARE, THEY ALL TELL ME, "WE ARE RELUCTANT TO MAKE BIG BETS AND MAKE BIG COMMITMENTS ON INVESTMENTS IN THE FUTURE." AND SO THIS HAS REAL IMPLICATIONS, I THINK, FOR THE LIKELIHOOD THAT WE'RE GOING TO MAKE QUICK MOVEMENT TO A NEW TRAJECTORY, IF THAT'S GOING TO HAPPEN.

LIESMAN: DOES THIS NEGATE THE POSITIVE EFFECTS OF THE TAX CUTS?

BOSTIC: IT IS - THE WAY I SAY IT - IS A DOWNSIDE RISK. AND THERE'S -- UNCERTAINTY HAS ITS OWN CONTRIBUTION. THEN WE HAVE TO WIND UP AND FIGURE OUT WHAT THE POLICY WINDS UP BEING. AND IF THE POLICY TURNS OUT IN CERTAIN WAYS THEN BUSINESSES MAY GO FORWARD. BUT THE UNCERTAINTY NOW, YOU'RE AT A FORK IN THE ROAD AND THERE ARE MULTIPLE WAYS YOU CAN GO. AND I THINK, WHAT I'M HEARING FROM BUSINESSES IS THAT, "WE'RE GOING TO WAIT AND WE'RE GONNA SEE WHAT HAPPENS." AND I THINK THAT WILL OFFSET SOME OF THE IMPACT.

LIESMAN: LET ME GET TO SOME OF THE CORE ISSUES OF MONETARY POLICY RIGHT NOW. THE MARKET PRICING IN TWO ADDITIONAL HIKES THIS IS YEAR. DO YOU SEE A REASON TO DO THOSE TWO AND/OR ANOTHER ONE ON TOP OF THAT?

BOSTIC: WELL, WHEN I STARTED - WHEN THE YEAR STARTED, I WAS AT TWO. AND THEN THERE WAS THE TAX OVERHAUL, THERE WAS THE FISCAL PACKAGE WITH THE SPENDING AND I MOVED TO THREE, BECAUSE THAT WAS A LOT OF STIMULUS. I'M COMFORTABLE WITH THREE RIGHT NOW. AND SO I THINK THAT THE MARKET PRICE IN THE END - I THINK OUR COMMUNICATION HAS BEEN CONSISTENT WITH THAT IF YOU LOOK AT THE SUMMARY OF ECONOMIC PROJECTIONS, ALL THOSE SORTS OF THINGS. BUT I'M ALWAYS LOOKING TO SEE: IS THE ECONOMY COMING UP STRONGER THAN WE EXPECTED? IS IT COMING IN WEAKER THAN WE EXPECTED? SO I'M GOING TO MAKE SURE THAT MY DECISIONS AND THE COUNSEL I GIVE TO THE BOARD IS THAT LET'S LET THE EVIDENCE TELL US IF, YOU KNOW, WE'RE ON THE TRAJECTORY EXPECTED OR NOT. AND THEN ADJUST THAT WAY.

LIESMAN: ONE OF THE OTHER BIG ISSUES THAT WAS DISCUSS ED YESTERDAY IN THE MINUTES IS THIS ISSUE OF HOW CLOSE ARE WE TO THE END POINT. HOW CLOSE ARE WE TO THE TERMINAL RATE? WHAT IS THE NEUTRAL RATE? WHERE DO YOU STAND ON THIS ISSUE? SOME -- THERE WAS A COMMENT THAT A FEW PEOPLE ON THE BOARD THINK WE'RE CLOSE TO BEING THERE BEFORE TOO LONG.

BOSTIC: YEAH, SO WE HAVE LOTS OF DISCUSSIONS ABOUT THAT - ME AND MY STAFF TALK ABOUT THIS ALL THE TIME. YOU KNOW, OUR FOLKS HAVE THE VIEW THAT NEUTRAL IS SOMEWHERE BETWEEN 2.25% AND 2.75%. AND SO --

LIESMAN: THAT'S THREE RATE HIKES AWAY.

BOSTIC: THAT'S CLOSE. THAT IS CLOSE. SO ONE OF THE THINGS WE'RE TRYING TO GET A HANDLE ON IS - YOU KNOW, ARE WE SEEING SIGNS OF OVERHEATING AND HOW AGGRESSIVE SHOULD WE BE AS A - OR DO I THINK WE SHOULD BE.

LIESMAN: I WANT TO INTERRUPT YOU ON THAT BECAUSE THE ISSUE OF AGGRESIVE IS VERY IMPORTANT. BECAUSE REALLY THE QUESTION DO YOU NEED TO ACT TO GO FURTHER THAN NEUTRAL TO SLOW DOWN THE ECONOMY. IF YOU HAD TO MAKE THAT CHOICE NOW, HOW WOULD YOU ANSWER IT?

BOSTIC: I WOULD SAY NO RIGHT NOW. LIKE, FOR ME, I THINK WE GET TO NEUTRAL, AND THEN WE LET THE ECONOMY WORK. NOW I KNOW THAT WE HIT OUR TARGET OF 2%, BUT WE HIT THAT FOR LIKE, ONE MONTH OR A QUARTER. WE HAVE NOT BEEN PERSISTENTLY AT THAT LEVEL AND WE'VE COME CLOSE TO IT BEFORE AND WE'VE SEEN INFLATION TAPER OFF. SO I WOULDN'T TAKE THE SIGN THAT WE HAVE HIT THE TARGET AT ONE POINT AS DECLARING VICTORY. I WANT TO SEE HOW THE ECONOMY PLAYS OUT. AND I REALLY DO NOT WANT US TO CONTRACT AND REALLY DERAIL SOME OF THE MOMENTUM THAT WE HAVE SEEN IN THE ECONOMY.

LIESMAN: SPEAKING OF INFLATION, THE ISSUE OF OIL IS OUT THERE. ANOTHER LEVEL OF UNCERTAINTY HERE. WHAT AFFECTS DO YOU SEE IT HAVING ON THE ECONOMY?

BOSTIC: WELL OIL, AS YOU KNOW, OIL GOES THROUGH SO MANY OF THE PRODUCTS. IT IS GOING TO AFFECT THINGS. I WAS TALKING ABOUT IT WITH MY TRAINER YESTERDAY AND HE WAS COMPLAINING ABOUT THE GAS PRICES AND HOW THAT WAS PLAYING OUT. SO IT IS DEFINITELY GOING TO HAVE AN IMPACT ON OUR ECONOMY. BUT ONE THING I WOULD SAY, I REMEMBER BACK IN THE EARLY 2000s WHEN OIL I WAS AT 20 AND PEOPLE SAID, "WELL, IF OIL GOES TO 50, WE'RE GOING TO HAVE THIS HUGE RECESSION." AND IT JUST DIDN'T HAPPEN. SO BUSINESSES MAKE ADJUSTMENTS, CONSUMERS MAKE ADJUSTMENTS TO MAKE SURE THAT THEIR EXPERIENCES DON'T GO INTO LIKE, A LOT OF VOLATILITY. SO I'M GOING TO TAKE A WAIT AND SEE ATTITUDE. IT'S DEFINITELY GOING TO PUT PRESSURE ON PRICES BUT WE'LL SEE HOW MUCH BUSINESSES RESPOND AND HOW MUCH CONSUMERS DO.

LIESMAN: OK, BOSTIC, THANK YOU FOR JOINING US.

BOSTIC: GOOD TO TALK WITH YOU AS ALWAYS.

LIESMAN: ATLANTA FED PRESIDENT RAPHAEL BOSTIC. TOSS IT BACK TO YOU GUYS AND THE BIG STORY TODAY ON NORTH KOREA, CARL.