Why Lower Immigration Leads to Lower Interest Rates
When economists talk about immigration, they usually focus on jobs, wages, or fiscal costs. Federal Reserve Governor Stephen Miran wants to add another dimension: interest rates.
In his first speech since joining the Fed, Miran argued that shifts in immigration are one of the most powerful forces pushing down inflation and the economy’s “neutral” rate of interest —the level of rates that keeps growth steady without stoking inflation. If net immigration falls sharply from the pre-pandemic norm of about one million people a year to near zero, he estimates, rent inflation will slow by roughly a…
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