Federal Reserve to Cut Staff 10% Over ‘Couple of Years’

The Federal Reserve plans to cut its workforce by about 10% “over the next couple of years” amid a periodic review of its staffing levels, Federal Reserve Chair Jerome Powell told Fed staff in a memo obtained by PYMNTS.

In the memo, Powell said offers of voluntary deferred resignations to some Board staff will be part of the reduction.

“I have directed the leadership of the Federal Reserve, here at the Board and across the System, to find incremental ways to consolidate functions where appropriate, modernize some business practices, and ensure that we are right-sized and able to meet our statutory mission,” Powell wrote in the memo.

Reached by PYMNTS, the Federal Reserve declined to comment on the memo.

Bloomberg reported Friday (May 16) that a 10% reduction would amount to nearly 2,500 workers.

The Fed said in its 2023 annual report that there were 23,950 employees across the system, and it said in its 2024 budget that it expected to boost that number to 24,553, according to the report.

That reduction would leave staffing levels close to where they were a decade ago, per the report.

Powell wrote in the memo that the staff level at the Board has grown by only about 1% per year over the last decade and that the Fed’s budgets result from close oversight and engagement of Board members.

“Even so, 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. “The Fed has done that from time to time as our work, priorities or external environment have changed.”

Powell pointed to instances in the 1990s when the Fed did so because of government-wide efforts to improve efficiency and because of a decline in the use of checks.

“Each time, we were able to streamline our operations thoughtfully and deliberately over time to better reflect our current conditions while maintaining a rock-solid focus on meeting our public mission,” Powell wrote.

It was reported May 7 that three other financial regulators were set to see their sharpest layoffs in decades. Over 2,300 staffers across the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Securities and Exchange Commission were set to be laid off.