U.S. Federal Governor Miran states that tariffs are not causing inflation
In the ongoing debate about the economic impacts of President Donald Trump's policies, the issue of inflation has been a hot topic. Economists have been divided on the effects of Trump's tariffs on imports and recent changes in US immigration policy.
Stephen Miran, the new member of the US Federal Reserve's board, has been a vocal advocate for a 0.5 percentage point cut in interest rates. Contrary to the widely held view that a shortage of labor forces increases production costs and thus prices for food and services, Miran sees no inflationary pressure from President Trump's import tariffs.
However, Miran does see immigration as another reason for inflation in the US. He believes that bringing in millions of new immigrants to a country in a short period of time drives up housing prices, potentially contributing to inflation. In an interview with CNBC, Miran assured that he doesn't see substantial inflation from the tariffs.
Fed Chair Jerome Powell, on the other hand, has noted changes in immigration leading to reduced immigration as a factor affecting labor market dynamics. Powell made it clear this week that higher tariffs have already pushed up prices in some sectors, contradicting Trump's recent claims that tariffs do not increase inflation.
The current uncertainty in global trade, caused by Trump's erratic policy, can lead to shortages of certain products. In such cases, high demand can drive up the prices of these products, potentially contributing to inflation.
Miran, in an attempt to counteract the inflation caused by immigration, has proposed closing the border and having migrants leave the US. However, his position was in the minority at the Fed meeting, with the majority of economists maintaining the view that a shortage of labor forces increases production costs and thus prices for food and services.
The Fed had previously lowered the benchmark rate by 0.25 percentage points, but the impacts of tariffs are not yet significant and could potentially be a one-off. The long-term effects of Trump's policies on the US economy, including inflation, remain to be seen.
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