Volcker said the Fed will cut its spending.

The Federal Reserve Board will voluntarily cut its budget this year to comply with the “spirit” of the new budget balancing law, Fed Chairman Paul A. Volcker told a House Banking subcommittee. Volcker did not disclose how much the Fed’s $1.27-billion operating budget will be slashed. However, he specifically said that about half of the budget will be exempted from any cuts because this portion covered services that must be provided to banks. He said the Fed was taking this action to show support for the belt-tightening effort even though the Office of Management and Budget and the Congressional Budget Office have both ruled that the central bank is not subject to the 4.3% budget cuts required of other government agencies.