Fed Nominee Miran May Overstate Immigration Impact on Inflation, Experts Say

Federal Reserve Governor Stephen Miran recently sparked debate with his claim that reducing immigration under President Donald Trump’s policies could lower inflation in the United States. Miran suggested that a drop in immigration would reduce demand for housing, which would then push rents and overall prices lower. However, economists say that his calculations may significantly overstate the real impact.

Miran’s argument is based on research by Albert Saiz, a professor at MIT who has studied immigration and housing for many years. Saiz’s work shows that if a city receives an influx of immigrants equal to 1% of its population, rents in that city rise by about 1%. Other studies have found similar effects, some slightly larger or smaller. The key idea is that more people in a city lead to slightly higher housing costs.

Miran, in his first speech as a Fed policymaker, applied Saiz’s research to the entire United States but made a critical change in his calculations. Instead of using the total U.S. population of about 340 million, he based his numbers on the national renter population of around 100 million. This smaller denominator made the estimated impact on inflation about three times larger than it would be using the standard approach.

Saiz explained that if the proper numbers were used, the reduction in inflation from lower immigration would be minimal—about 0.1 percentage points per year. “Population growth does affect housing prices, but the magnitude isn’t big enough to justify major changes in monetary policy,” Saiz said. In other words, while fewer immigrants may slightly reduce rent increases, it would not significantly change the overall rate of inflation across the U.S.

Miran based his calculations on a 2003 study by Saiz that looked at the so-called Mariel boatlift of 1980. During this event, around 125,000 Cubans suddenly arrived in Miami, creating a short-term surge in housing demand. The study measured how that sudden population increase affected local rents. Miran’s interpretation applied the lessons from this single city and historical event to the whole country, which economists say is not directly comparable.

Critics also note that Miran’s policy view is not widely shared among other Federal Reserve policymakers. Most central bankers consider multiple factors, such as wages, energy prices, and global economic trends, when assessing inflation. Immigration may have a small effect on housing in certain regions, but it is only one of many influences on the U.S. economy.

Despite these critiques, Miran’s comments have attracted attention because they suggest a link between Trump’s immigration policies and the Fed’s potential approach to managing inflation. If policymakers place too much weight on this factor, they could make decisions that do not match the actual economic conditions.

In conclusion, while immigration does affect housing demand and rent prices, the overall impact on national inflation is small. Experts say Miran’s calculations overstate the effect, and major changes in monetary policy based solely on immigration trends may not be justified. The debate highlights the importance of using careful, accurate math and considering the broader economy when making decisions about interest rates and inflation.