Federal Reserve will reduce staff by 10% in coming years, Powell memo says
The Federal Reserve, under the leadership of Chair Jerome Powell, has announced plans to reduce its headcount by 10% over the next few years. This decision is part of an effort to streamline operations, consolidate functions, and ensure that the central bank is properly sized to meet its statutory mission. Powell emphasized the importance of periodically reassessing staffing and resources to adapt to changing priorities and external conditions.
One of the strategies to achieve this reduction in staff numbers is the implementation of a voluntary deferred resignation program. This program will be offered to employees of the Federal Reserve Board who are fully eligible to retire by the end of 2027. By offering this option, the Fed aims to gradually decrease its workforce while providing an opportunity for older employees to transition into retirement.
According to the central bank’s 2023 annual report, the Federal Reserve currently has just under 24,000 employees. A 10% reduction would bring this number below 22,000. This move towards a leaner workforce comes amidst a broader push for cost-cutting measures across government agencies, led by figures such as Elon Musk and the Department of Government Efficiency.
While the Trump administration has advocated for reductions in government spending, Powell’s memo did not specifically cite external pressures as a factor in the decision to shrink the Fed’s headcount. The announcement of planned staff cuts was first reported by Bloomberg News, highlighting the ongoing efforts within the central bank to optimize operations and ensure efficiency.
In conclusion, the Federal Reserve’s decision to reduce its workforce reflects a strategic approach to aligning staffing levels with organizational goals. By implementing targeted measures such as the voluntary deferred resignation program, the central bank aims to enhance operational effectiveness and resource allocation. This initiative underscores the Fed’s commitment to adapting to changing circumstances and optimizing its capabilities to fulfill its mandate.
