Fed Governor Miran May Overstate Immigration’s Impact on Inflation, Experts Say

A recent analysis of Federal Reserve Governor Stephen Miran’s comments on immigration and inflation shows that his estimates may overstate the effect of U.S. immigration policy on housing prices and overall inflation. While Miran argues that President Donald Trump’s stricter immigration policies will reduce inflation by lowering housing demand, experts say the impact is likely much smaller than he suggests.

Miran’s argument draws on research by Albert Saiz, an economist at MIT who has studied immigration and housing markets for decades. Saiz’s work shows that if the population of a city increases by 1% due to immigration, rents in that city rise by about 1%. This finding is based on historical events, such as the sudden arrival of Cuban refugees in Miami in 1980, known as the Mariel boatlift.

However, Miran’s calculation differs from Saiz’s method. Instead of comparing the number of new residents to the total U.S. population of about 340 million, he used the smaller number of renters in the country, roughly 100 million. This choice made the predicted impact on national rent inflation appear about three times larger than it would be using Saiz’s approach.

Saiz explained in an interview that using the correct population numbers, the effect of stopping immigration on rent inflation would be very small, around 0.29% per year. Because housing makes up only about one-third of the consumer price index, the overall impact on total inflation would be at most 0.1 percentage points. In other words, while immigration affects housing costs, it is not large enough to justify major changes in U.S. monetary policy.

Miran’s estimates suggest that halting immigration could reduce rent inflation by 2 percentage points by 2027 and pull overall consumer inflation down by 0.4 percentage points. Based on this calculation, he argues that the Federal Reserve could justify lowering interest rates by half a percentage point.

Other research supports Saiz’s view that the effect of immigration on housing prices is limited. A 2007 study by Saiz and subsequent international studies indicate that while sudden population increases can temporarily affect rents in a specific area, the national impact is far smaller. Another recent study found that mass deportations in the U.S. between 2008 and 2013 actually increased housing prices in some areas. This rise was likely due to a reduced construction workforce, which slowed homebuilding.

Miran’s analysis has sparked debate because it diverges from the views of other Fed policymakers. Many economists argue that the link between immigration restrictions and lower inflation is too weak to guide major changes in monetary policy. Critics say that focusing too heavily on Miran’s estimates could risk misjudging broader economic conditions, including labor shortages, supply chain challenges, and other factors that influence inflation.

While Miran’s updated speech clarifies that his estimates are based on historical “quasi-random immigration shocks” like the Mariel boatlift, experts caution that these events are very different from nationwide immigration policy changes today. They stress that inflation is influenced by many factors, including energy prices, wages, and global supply chains, not just housing demand.

Disclaimer: This report is intended for general informational purposes and should not be taken as financial advice. The analysis reflects expert commentary on Miran’s interpretation of immigration’s impact on inflation, but real-world outcomes may differ.