The Federal Reserve plans to shrink its workforce by about 10% over the coming years, bringing the central bank in line with President Trump’s broader efforts to streamline the federal government, according to a memo that Fed Chairman Jerome Powell sent to staff on Friday.
In the internal memo, a copy of which was seen by Reuters, Powell said that he has directed Fed leadership to find “incremental” ways to trim operations, with a goal of shrinking the Fed’s roughly 24,000 person headcount nationwide by about 10% over “the next couple of years.” The memo was first reported by Bloomberg.
As part of that effort, the Fed plans to offer a voluntary deferred resignation program to board staff in Washington who would be eligible to retire at the end of 2027. The memo made no mention of any involuntary cuts or layoffs.
“Experience here and elsewhere shows that it is healthy for any organization to periodically take a fresh look at its staffing and resources,” Powell wrote in the memo, noting the Fed previously made similar changes in the 1990s when President Bill Clinton sought to reduce the size of the federal government.
“I believe it is time to do it again, in that same conscientious and deliberate spirit,” Powell added.
In the memo, Powell did not provide many details on how the Fed may revamp efforts, but emphasized any changes would prioritize the Fed’s mandates and statutory obligations, and ensure that its work remains “high quality, nonpolitical and mission-focused.”
The new Fed initiative comes as Trump has launched an aggressive effort to downsize and reshape the US government via billionaire adviser Elon Musk’s Department of Government Efficiency, or DOGE.
While the Fed does not have its budget set by Congress and does not report directly to the White House, Powell said the central bank must be a “careful and responsible steward of public resources.”
Powell gave a nod to the broader Trump-led effort by noting that the Fed often pursues cuts of its own “when there have been government-wide efforts to improve efficiency, like in the 1990s and now.”
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