The Federal Reserve will reduce its work force by 10 percent over the next several years to ensure the institution is “right-sized and able” to carry out its duties to foster a healthy economy.
Jerome H. Powell, the chair of the central bank, announced the plan on Friday in an internal note to staff members reviewed by The New York Times. Certain employees will be eligible to participate in a voluntary deferred resignation program that is aimed at giving those close to retirement the option of an earlier exit. That offer will only apply to people at the Washington-based Board of Governors.
Cuts are expected to be made across the entire Federal Reserve System, including the 12 regional banks. Roughly 2,400 people will be affected.
“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,” Mr. Powell said in the memo.
The Fed earlier this year imposed a hiring freeze on permanent workers as part of its efforts to align with the Trump administration’s decree that no federal position vacant at the time could be filled nor could new positions be created. It also took steps to distance itself from diversity issues as well as those related to climate change — initiatives that President Trump has opposed.
The Fed is a politically independent institution, meaning it is not legally obligated to carry out orders by the executive branch. That buffer from the White House is being legally challenged by the Department of Justice, which has sought more sway over independent agencies.
The announcement made on Friday mirrors an effort by the Fed during the Clinton administration to cull its work force, which Mr. Powell cited in his note. At that time, there were “government-wide efforts to improve efficiency,” as was the case “now,” Mr. Powell said.
Mr. Trump is pursuing a similar goal, although much more aggressively than past administrations have. The newly formed Department of Government Efficiency, led by the billionaire entrepreneur Elon Musk, has taken to gutting the federal work force, including shuttering agencies wholesale. Tens of thousands of government employees have since left their jobs.
The Fed’s decision is not tied to the ongoing initiative by DOGE, although some staff at the central bank were contacted earlier this year by Mr. Musk’s group, according to people familiar with the matter.
“The Federal Reserve is a careful and responsible steward of public resources,” Mr. Powell said in his note on Friday.
Colby Smith covers the Federal Reserve and the U.S. economy for The Times.
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