Fed Axes 10% of Workforce—Powell Wields the Layoff Hammer

In a move that’ll make Wall Street bankers clutch their pearls, Chair Jerome Powell announces the Federal Reserve will slash staff by 10%. Because nothing says ’economic stability’ like pink slips at the central bank.

The Powell Putsch

The Fed—often criticized for its bloated bureaucracy—is finally trimming the fat. No word yet on whether the remaining 90% will get blockchain-based efficiency training.

Cynical Take

Watch as these laid-off economists pivot seamlessly into crypto Twitter—where their doomposting skills will finally be properly monetized.

Powell warns of tougher economic conditions ahead

During the Thomas Laubach Research Conference in Washington, Powell also spoke on current economic shifts and what they mean for future Fed policy. He warned that longer-term interest rates may have to stay higher than what markets had gotten used to during the previous decade.

“We may be entering a period of more frequent, and potentially more persistent, supply shocks — a difficult challenge for the economy and for central banks,” Powell said in prepared remarks. He pointed out that the central bank’s job is going to be harder in an environment where inflation could swing more wildly and unpredictably than it did during the 2010s.

The Fed held interest rates NEAR zero for seven years after the 2008 financial crisis, but those days are over. Powell made it clear that those ultra-low rates are not coming back anytime soon.

Since December 2024, the Fed has kept its benchmark lending rate in a range between 4.25% and 4.5%, and it currently sits around 4.33%.

Although Powell did not refer directly to Donald Trump’s tariffs in his remarks, he has recently said that tariffs could lead to slower growth and higher inflation. 

Still, he admitted that the overall impact is hard to measure—especially since Trump just paused the more extreme tariffs during a 90-day negotiation window.

That uncertainty leaves the Fed stuck between trying to cool inflation and not tank the labor market. So far, Powell has shown no appetite to lower rates again after the full percentage point cut last year.

Fed reopens policy review after 2020 misfires

Beyond rates and staffing, Powell also said the Fed is reopening its policy framework review, a process that guides how the bank makes decisions. This review, which was last completed in 2020, will cover how the Fed communicates future plans, as well as what it missed the last time around.

The last review led to the adoption of the flexible average inflation target. It was supposed to let inflation rise above the 2% mark for a while, to help boost employment. That plan was short-lived. When the COVID pandemic hit and prices started rising fast, the Fed was forced to start hiking rates instead.

Now, Powell says the new review will look at how the Fed evaluates shortfalls in inflation and job growth—especially when they fall below targets. He acknowledged that mistakes were made. In 2021, Powell and other officials dismissed rising prices as “transitory,” blaming the pandemic’s effects. That judgment call backfired.

Even worse, some current Fed officials have said that the 2020 framework didn’t even influence their decisions. They kept rates low even when inflation was clearly getting out of hand, but not because of any formal rulebook—they just underestimated what was happening.

Cryptopolitan Academy: Tired of market swings? Learn how DeFi can help you build steady passive income. Register Now