U.S. Federal Reserve Chair Jerome Powell just left a press conference in Washington, D.C. after a two-day meeting of the Federal Open Market Committee on interest rate policy. The meeting took place on May 7, 2025, and Powell spoke to reporters about the decisions made. The Federal Reserve is planning to cut its workforce by 10% in the next few years. This reduction will involve offering older employees the option of deferred resignation, as outlined in a memo from Powell. The goal is to reassess staffing and resources periodically to ensure the organization is operating efficiently.
Powell emphasized the importance of adapting to changing work environments and priorities, stating, “Experience here and elsewhere shows that it is healthy for any organization to periodically take a fresh look at its staffing and resources.” He directed leaders within the Fed to explore ways to consolidate functions, modernize practices, and ensure the institution is appropriately sized to fulfill its mission. One strategy for reducing staff numbers is to offer a voluntary deferred resignation program to eligible employees who could retire by the end of 2027. As of the 2023 annual report, the Federal Reserve had around 24,000 employees, and a 10% reduction would bring the count below 22,000.
The decision to downsize the workforce comes amidst a broader push for cost cuts across government agencies, led by the Trump administration and figures like Elon Musk. Musk, known for his efficiency-focused initiatives, has criticized the Fed for being “absurdly overstaffed.” However, Powell’s memo did not explicitly reference Musk or the Department of Government Efficiency as influencing factors in the staffing changes. News of the planned staff cuts was initially reported by Bloomberg, and CNBC’s Matt Cuddy also contributed to the reporting. It remains to be seen how the reduction in workforce will impact the Federal Reserve’s operations and ability to meet its objectives in the future.
