The Federal Reserve will seek to cut its headcount by 10% over the next few years, Chair Jerome Powell told staff in an internal memo seen by Banking Dive.
The lower headcount will come as a result of a voluntary deferred resignation program that will be offered to Fed employees who would otherwise be fully eligible to retire at the end of 2027. Staff who are eligible for the program, which was previously offered in 1997, will be notified via email, the memo said.
“Experience here and elsewhere shows that it is healthy for any organization to periodically take a fresh look at its staffing and resources. The Fed has done that from time to time as our work, priorities, or external environment have changed,” Powell said in the memo.
Leaders at the Fed have been instructed by Powell 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.”
The Fed has approximately 24,000 employees.
The Fed’s planned headcount whittling is in line with widespread headcount cuts and layoffs implemented by the pseudo-federal agency Department of Government Efficiency, led by Tesla and X CEO Elon Musk.
The Federal Deposit Insurance Corp. aims to reduce headcount by 1,250, or 20% of staff, through a workplace optimization initiative, and the Consumer Financial Protection Bureau is seeking to cut 90% of its staff. The latter is caught up in a court battle over the cuts.
However, DOGE is guided by executive orders implemented by President Donald Trump, and the Fed is an independent body not obligated to follow Trump’s orders.
The lower headcount goals, Powell wrote, are in line with “when there have been government-wide efforts to improve efficiency, like in the 1990s and now.”
When the Fed had previously set goals to lower its headcount, it was to “streamline our operations thoughtfully and deliberately over time to better reflect current conditions while maintaining a rock-solid focus on meeting our public mission,” he wrote.
