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The Federal Reserve has said it will slash its workforce by 10 per cent in the coming years as it seeks to be a “responsible steward of public resources”.
Fed chair Jay Powell said in an internal email seen by the Financial Times that he had directed leadership at the Federal Reserve Board and its network across the US to “find incremental ways to consolidate functions where appropriate, modernise some business practices and ensure that we are right-sized and able to meet our statutory mission”.
He added: “Over the next couple of years, our overall staffing level will decline by about 10 per cent from today.”
The Federal Reserve Board in Washington employs about 3,000 people, while the entire system has 24,000 employees.
The central bank’s decision comes at a time when President Donald Trump’s administration has called for steep cuts to spending across government agencies. The president has also repeatedly hit out at the Fed in recent weeks for pausing its cycle of interest rate cuts, calling Powell a “fool”.
Elon Musk, whose so-called Department of Government Efficiency (Doge) is leading the cost-cutting drive, has previously said the Fed was “absurdly overstaffed”. However, the Fed’s plans were decided within the agency and were not made at the behest of Doge, according to a person familiar with the matter.
Powell said in his note to staff, which was first reported by Bloomberg, that the Fed would “offer a voluntary deferred resignation programme to staff who are fully eligible to retire as of December 31, 2027”.
The voluntary resignation offer only applies to employees at the board of governors, though the 10 per cent decrease will apply across the Federal Reserve system, which includes 12 regional banks.
Powell said the Fed, as “a careful and responsible steward of public resources”, needed to ensure its budgets were “mission-driven”.
“Experience here and elsewhere shows that it is healthy for any organisation to periodically take a fresh look at its staffing and resources,” he said, citing a similar drive in 1997. That year was also the last time there was a government-led effort to reduce federal staffing.
“I believe it is time to do it again, in that same conscientious and deliberate spirit,” Powell added.
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