The choice of Bostic, 50, director of the Bedrosian Center on Governance at USC's Sol Price School of Public Policy, comes after members of Congress and advocacy groups have sharply criticized the central bank for a lack of diversity.
They had pushed for a diverse choice to head the Atlanta region, in part because it has a large African American population.
Bostic acknowledged the significance of his appointment, which he said "is a very big deal" that made him the answer to a "Jeopardy" question.
"It's not lost on me that I ...am the first African American to lead a Federal Reserve institution," he said in a short video released by the Atlanta Fed. "It's kind of daunting. It's an overwhelming thought. It's a tremendous privilege."
"I look forward to this being a stepping stone for many others to have this opportunity as well," Bostic said.
"Given the disparate economic experiences faced by key demographic groups, it is crucial that a broader cross-section of groups have a seat at the decision-making table," said Waters, the top Democrat on the House Financial Services Committee.
Thomas Fanning, chairman of the Atlanta Fed's board, said Bostic "brings a wealth of experience from an outstanding career in academia, government and research." Bostic has worked as senior economist for the Fed's Board of Governors in Washington, D.C., and spent three years as an official at the U.S. Department of Housing and Urban Development.
"What made Raphael our top choice for the Atlanta Fed president? His positive energy, his deep knowledge of income inequality, economic opportunity and consumer banking issues and his outstanding personal character and intellect," said Fanning, chief executive of Atlanta-based energy firm Southern Co., in a video announcement.
"Raphael has a real talent for understanding how policy impacts people," Fanning said.
Bostic's appointment was approved by the Atlanta Fed's board of directors and the Board of Governors in Washington. He will take over on June 5, succeeding Dennis Lockhart, who announced his resignation in September and stepped down on Feb. 28.
The job involves overseeing about 1,700 employees in the Atlanta region — Alabama, Florida, Georgia and parts of Louisiana, Mississippi and Tennessee — and participating in monetary policy deliberations in Washington.
Bostic will be an alternate member of the monetary policymaking Federal Open Market Committee this year and rotate into one of the 10 voting positions next year.
"The Federal Reserve system is a very important system in our public policy apparatus and to have a chance to be part of that and contribute my expertise and experiences is just a thrilling prospect," Bostic said on the video. An Atlanta Fed spokeswoman said he would not be doing interviews until after he starts at the bank.
Bostic earned his doctorate in economics from Stanford and worked for theBoard of Governors in Washington from 1995 to 2001. He rose to be a senior economist in the monetary and financial studies division, earning a special achievement award for his work on the Community Reinvestment Act. The act encourages banks to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods.
He joined USC in 2001 as a professor in the school of policy, planning and development. His work has included research into home ownership, housing finance and neighborhood change. He also served as the interim director of USC's Lusk Center for Real Estate from 2105 to 2016.
From 2009 to 2012, Bostic was assistant secretary for policy development and research at HUD.
He said he wants housing issues to be more involved in Fed policy discussions.
"If people are not housed well, they're not going to do well in school. They're not going to have stable jobs, their health might be at risk," he said. "We're certainly going to be thinking about looking at how housing is contributing or hampering people's quality of life in the communities we're responsible for."
The five sitting members of the Fed's Board of Governors and 11 of the 12 regional bank presidents were white before Lockhart stepped down. Since the central bank was created in 1913, three African Americans have served as governors, but there have been no Latinos. There had never been an African American regional Fed president. There still never has been a Latino regional Fed president.
Shortly after Lockhart announced his resignation, Waters joined Democratic Reps.
The letter said that "grave racial disparities exist across our nation in unemployment wages and income." It also said that the unemployment and poverty rates for African Americans in the Atlanta region were about double those for whites.
The Atlanta Fed's search committee responded by asking the public for the first time to submit names of potential candidates. The Atlanta Fed also has tried to make the process more transparent by posting details on its website, including holding an October webcast in which Fanning answered the public's questions.
Asked about the importance of diversity for addressing "the special concerns of minority communities," Fanning said he thought the Fed already did a good job on the issue, but "increasing our cultural bandwidth" was important.
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10:30 a.m.: This article was updated with reaction from Rep. Maxine Waters.
9:35 a.m.: This article was updated with comments from Bostic and Fanning in videos released by the Atlanta Fed.