FILE PHOTO: Stephen Miran, U.S. President Donald Trump's nominee to the Federal Reserve Board attends a Senate Banking, Housing and Urban Affairs Committee nomination hearing on Capitol Hill in Washington, D.C., U.S., September 4, 2025. REUTERS/Elizabeth Frantz/File Photo

By Ann Saphir

(Reuters) -An economist whose research provided a foundation for Federal Reserve Governor Stephen Miran's argument that President Donald Trump's immigration crackdown will slow inflation by cutting demand for housing says the new central banker is overstating the impact.

After Reuters queried the Fed about Miran's numbers, it updated his speech from Monday to clarify that the estimate is based on a "large quasi-random immigration shock," a reference to the Cuban refugees who suddenly sought housing in the Miami area 45 years ago.

A Fed spokesperson did not immediately respond to a request for comment.

IMMIGRATION DROP MAY REDUCE RENTS A LITTLE

Work by Albert Saiz, an MIT economist who has studied immigration and housing for decades, shows that an inflow of immigration equal to 1% of the population of a city leads to about a 1% increase in rents in that city. Other researchers have also found such impacts - some bigger, some smaller - and Saiz told Reuters he does not argue with the idea that reversing the inflow will tend to reduce rents.

Miran, in his debut speech as the Fed's newest policymaker, latched onto that idea but didn't follow Saiz's formula - choosing an estimate of the national renter population of about 100 million people as his denominator rather than the far-larger total U.S. population of 340 million. The result was an imputed impact on inflation about three times larger than using Saiz's approach.

"If you did the calculation using the right magnitudes, you get 1 divided by 340 million - that’s about 0.29 percent a year," Saiz said in an interview. Given that the share of housing in the consumer price index is about one third, the overall impact on consumer inflation would be at most 0.1 percentage points, he said. "Obviously population growth does impact the price of housing, but the magnitude isn't big enough to justify major changes in monetary policy."

Miran argues that net-zero immigration under Trump's new border policies implies 1 percentage point-per-year lower rent inflation. He bases that on a 2003 Saiz paper that looked at how a sudden influx of Cubans into Miami in 1980 - the so-called Mariel boatlift - impacted rental prices in that city. That paper did look at how much that influx expanded Miami's renter population.

A second Saiz paper in 2007 - and much but not all of the subsequent international literature on the subject - suggests a more limited effect. A paper last year by a trio of researchers showed that mass deportations, rolled out across the United States from 2008 to 2013, drove housing prices up, likely due to reductions in the construction workforce and a slowdown in homebuilding.

Miran's updated speech retains his estimate that rent inflation in the consumer price index will fall 2 percentage points through 2027 - equal to his estimate of the rental inflation effect based on his reading of Saiz.

That drop would pull total inflation by the measure the Fed uses - the 12-month personal consumption expenditure index -- down by 0.4 percentage points by early 2028, justifying a half-point reduction in the Fed's policy rate, he said in the speech.

"One might characterize this view on rental inflation as optimistic," Miran said. "However, I believe forecasters have underappreciated the significant impact of immigration policy on rent inflation—both on the way up and, now, on the way down."

Overall Miran says Fed policy is fully 2 percentage points too high, a view that does not have any other takers among the Fed's other 18 policymakers.

TRUMP'S BID TO INFLUENCE FED POLICY

The unusual correction to a published speech comes amid heightened focus on Miran in the context of ongoing uncertainty over the Fed's independence as Trump pressures it to slash rates and tries to fire another Fed governor, Lisa Cook.

Miran, who has a PhD in economics from Harvard, was appointed by Trump to a seat vacated last month after the unexpected departure from the Fed board by Adriana Kugler, and the Republican-controlled Senate - at Trump's urging - rushed his nomination through in order for him to be in position to participate and vote at last week's meeting.

His term expires on January 31, offering a limited window for him to have an impact on the interest rate debate from inside the central bank.

But nothing prevents Miran, who has not formally left his job as the chair of Trump's Council of Economic Advisers, from staying in the seat until Trump appoints a successor.

It is a scenario complicated by the coming end of Chair Jerome Powell's tenure as the Fed's leader and by the continuing legal fight over the attempt to fire Cook, which could open another vacancy for Trump to fill should he succeed. That matter is now before the Supreme Court.

(Reporting by Ann SaphirEditing by Dan Burns and Anna Driver)