US Federal Reserve to cut workforce by 10% over next few years

Federal Reserve Chair Jerome Powell announced on Friday a planned workforce reduction of approximately 10 per cent over the coming years, according to a staff memo reported by AFP. Though the Federal Reserve operates independently, generating revenue from interest on securities and supervisory fees rather than congressional appropriations, Powell stressed on the value of periodic reassessment.“Experience here and elsewhere shows that it is healthy for any organisation to periodically take a fresh look at its staffing and resources,” he wrote in the memo, first reported by Bloomberg News. The strategy includes a “voluntary” deferred resignation programme for eligible staff at the Federal Reserve Board in Washington. According to the Fed’s 2023 annual report, the system employed 23,950 people nationwide, including roughly 3,000 at the Board and over 20,000 across the twelve regional reserve banks. A 10 per cent reduction would amount to about 2,400 positions.Also read: US consumer sentiment falls for fifth month driven by inflation fearsThe move is aligned with a broader federal initiative spearheaded by President Donald Trump to scale back government staffing levels, under the direction of the Department of Government Efficiency led by Elon Musk. “The Fed is absurdly overstaffed,” Musk had said on social media earlier this year.Powell has directed leadership 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 that the deferred resignation option would help create “new professional growth opportunities for our staff” while preserving the Fed’s ability to fulfil its responsibilities in the years ahead.