Federal Reserve Governor Stephen Miran recently stirred the economic pot with his remarks linking deportation efforts to inflation. During a speech at the Economic Club of New York, he stated that reducing net migration—even to the extent of negative migration due to deportations—could have a deflationary effect. “Cutting down net migration to zero… I think is very deflationary,” he asserted. This bold claim is significant, as it is one of the clearest connections made by a Federal Reserve official between immigration policy and inflation trends.
Miran’s comments gained traction on social media, with enthusiasm over an acceleration in deportations to facilitate interest rate cuts. This appraisal places him in direct conflict with other Fed members, who caution against reducing rates too quickly due to the risks of reigniting inflation. Miran, appointed by the Trump administration, has consistently advocated for lowering interest rates, suggesting that current rates, which sit between 4% and 4.25%, are too restrictive for today’s economic landscape.
The basis of Miran’s argument is the straightforward economic principle of supply and demand. A shrinking labor pool from deportations could lead to slower wage growth, which in turn could dampen consumer demand. As he noted, “The upshot is that monetary policy is well into restrictive territory… risking unnecessary layoffs and higher unemployment.” A decrease in net migration might curb labor participation and reduce wage pressure, factors that typically contribute to inflation.
The U.S. Census Bureau reports that net international migration fell to just over 247,000 in 2021, a significant drop from more than 1 million annually in the mid-2010s. While there has been a slight rebound in recent data, escalated deportations under current policies have pushed migration figures closer to zero once again. Miran’s assertion that immigration enforcement can be viewed as an economic lever is a point of contention and raises eyebrows among his colleagues at the Fed.
Despite Miran’s stance, several senior officials within the Federal Reserve express skepticism about rapid policy easing. For instance, officials like St. Louis Fed President Alberto Musalem and Cleveland Fed President Beth Hammack advocate for caution, stressing that monetary policy should act against persistent inflation. Musalem cautioned, “Overemphasizing the labor market… could do more harm than good.”
Federal Reserve Chair Jerome Powell has sought a balanced approach, acknowledging signs of progress on inflation while emphasizing the need to remain vigilant about potential risks. As of mid-2025, inflation remains slightly above the Fed’s 2% target, which keeps pressure on policymakers.
Some analysts argue that immigration policy is just one piece of the inflation puzzle. Ron Temple of Lazard raised concerns that stricter immigration enforcement might create inflationary pressures as employers struggle to fill jobs, leading to wage increases. This perspective directly counters Miran’s deflationary thesis and highlights the complexity of the issue.
The implications of these differing views depend on the timing and industry specifics. Labor-intensive sectors might face challenges if they lose access to undocumented workers, potentially leading businesses to automate or pass on costs to consumers—both of which could stoke inflation short-term. However, over time, reduced demand from dwindling households could put downward pressure on prices.
Miran has made his position clear: he believes the Fed is holding rates too high, partly due to an incomplete understanding of the impacts of immigration enforcement and other regulatory changes that have shifted the neutral interest rate. He publicly opposed the last rate decision, calling for a more substantial cut than what was agreed upon. If his push succeeds, he could bring rates down to below 3.5%, levels not seen since prior to the pandemic-era inflation surge of 2021–2022.
Furthermore, Miran warned against the risks of keeping interest rates too tight, stating, “Leaving short-term interest rates roughly two percentage points too tight risks unnecessary layoffs and higher unemployment.” Recent labor market indicators show a slight uptick in jobless claims and a deceleration in wage growth, supporting Miran’s contention that demand-side pressures could already be easing.
Meanwhile, Richmond Fed President Thomas Barkin did not share these concerns about the economy, pointing out that consumer spending remains robust, driven by low unemployment and increasing real wages. “Consumers are spending nicely… why wouldn’t they?” he said in a recent meeting.
In light of these internal debates, Miran’s linkage of immigration policy to core monetary policy raises important questions. The upcoming Fed policy meeting in late August could be pivotal in shaping future rate decisions, influenced by new data on inflation, employment, and immigration.
The political landscape is also shifting. President Trump has long advocated for more rapid rate reductions, emphasizing his administration’s influence on economic performance. Miran’s framing of deportation as a tool for economic policy may lend weight to that narrative. “The Fed may be ready to lower rates again,” Trump remarked recently while visiting Fed headquarters, hinting at further alignment between the White House and Fed policies.
For now, the markets are monitoring this evolving situation, with current forecasts reflecting a 40% chance of a rate cut in September, with slightly improved odds for November. Traders are focused on core inflation data, wage growth, and jobless claims for indicators that might lead the Fed toward Miran’s more aggressive stance.
The ongoing debate illuminates contrasting perspectives on the state of inflation and whether approaches like deportation can sustainably influence economic outcomes. Miran’s bold assertions challenge traditional thinking and may pave new paths for policy discussions in the future.
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