Elon Musk has targeted the Federal Reserve, calling the agency "ridiculously overstaffed" in a post on X (formerly Twitter).

The eccentric billionaire, who is set to lead the Department of Government Efficiency (DOGE) under President Donald Trump, seems interested in criticizing the central bank.

His comments came after the central bank announced a disappointing "hawkish interest rate cut," causing market turmoil and receiving sharp criticism from Trump. The Fed employs about 24,000 people across 12 regional banks and the Board of Governors in Washington, a number that both Elon and Trump find excessive.

Elon, along with entrepreneur Vivek Ramaswamy, is leading Trump's $2 trillion government efficiency overhaul. "We are cutting the fat," Trump said during his campaign. "No one gets to sit around collecting a paycheck without doing anything — not even Jerome Powell."

Trump and Elon battle the Fed and Powell

The president has targeted the central bank since day one. He blames the bank's monetary policy for stifling economic growth during his first term and has made several direct attacks on Powell, the Fed chair he appointed.

"That's the easiest job in government," Trump scoffed. "You just show up once a month, say something vague, and leave the rest to improvisation."

Elon's new role as one of Trump's closest advisors is amplifying these attacks. With DOGE, he plans to overhaul bloated organizations.

In fact, this central bank employs far fewer staff than European central banks. Only the central banks of Germany, France, and Italy surpass the Fed's staffing level, but Trump argues that this number is still too high.

Christine Lagarde, President of the European Central Bank, has fired back at his comments. She stated, "I have thousands of hard-working people—economists, lawyers, computer scientists—defending the euro every day, not just once a month." For his part, Powell remains silent, true to his nature.

The Fed's hawkish cuts

Fed Chair San Francisco Mary Daly described last week's announcement of a 25 basis point rate cut as an "emergency call." Recently, she explained that this decision marks the end of the adjustment phase, forcing them to take a more cautious approach.

The market did not react well. The S&P 500 fell nearly 3%, and the Nasdaq 100 dropped 3.6%, reflecting investors' concerns about prolonged inflation and slower monetary easing. The FOMC also adjusted its forecast for 2025, raising its average estimate for the federal funds rate to 3.9% from 3.4%.

This means there will be fewer interest rate cuts, with only two expected instead of six or even four as previously anticipated. Daly stated that policymakers must remain flexible, saying, "We will adjust if inflation falls faster or if the labor market weakens significantly."

The strength of the labor market and the risk of persistent inflation have put the Fed in a difficult position. Earlier this year, the Fed made interest rate cuts in September (50 basis points) and November (25 basis points) to combat signs of economic recession.

But inflation persists, forcing the Fed to balance growth and stability.

The Fed's budget and personnel

The Fed's 2024 budget increased by 6.3% to $6.053 billion, including operations, employee salaries, and services for the U.S. Department of the Treasury. The Fed plans to hire 21,238 full-time employees, a 1.9% increase from last year.

Elon called this growth "unacceptable," pointing to technological advancements that could help reduce the demand for additional personnel.

Trump's broader economic policies could further challenge the Fed. The tariffs and tax cuts he proposed are expected to push inflation up by 2.5 percentage points, potentially driving core inflation above the 2% target by 2025.

Analysts warn that the Fed may even have to delay two interest rate cuts next year until the fourth quarter for this reason. Meanwhile, Powell has defended the independence of his office, stating that their decisions are made in the interest of all Americans, not for a political agenda.

But Trump does not care. "Why do unelected officials have the final say on our economy?" he asked. "We are taking back control."