US Fed Plans to Cut Workforce by 10% Over Next Few Years

WASHINGTON: The Federal Reserve intends to reduce its workforce by approximately 10 per cent in the upcoming years, aligning the U.S. central bank with President Donald Trump's wider initiatives to simplify the federal government, as stated in a memo from Fed Chairman Jerome Powell to staff on Friday. In an internal memo reviewed by Reuters, Powell stated that he has instructed Fed leadership to identify "incremental" measures to reduce operations, aiming to decrease the Fed's approximately 24,000 staff nationwide by about 10 per cent in "the coming years." Bloomberg was the first to report the memo.

As a part of this initiative, the Fed intends to provide a voluntary deferred resignation program for board staff in Washington who qualify for retirement by the end of 2027. The memorandum did not refer to any forced reductions or job losses. "Experience both here and in other places indicates that it is beneficial for any organisation to regularly reassess its personnel and resources," Powell stated in the memo, pointing out that the Fed had made comparable modifications in the 1990s when President Bill Clinton aimed to decrease the size of the federal government. "I feel it is time to repeat the action, with that same careful and intentional mindset," Powell stated.

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In the memo, Powell offered few specifics on how the Fed might reform its initiatives, but stressed that any alterations would focus on the Fed's mandates and legal duties, ensuring its activities stay "high quality, nonpolitical, and mission-centred." The recent Fed initiative arises as Trump has begun a vigorous campaign to reduce and restructure the U.S. government through billionaire advisor Elon Musk's Department of Government Efficiency, known as DOGE. Although the Fed's budget is not determined by Congress and it doesn't report directly to the White House, Powell stated that the central bank should be a "careful and responsible steward of public resources." Powell acknowledged the wider Trump-led initiative by mentioning that the Fed frequently implements its own cuts "when there are government-wide attempts to enhance efficiency, similar to the 1990s and presently."