“I do think the president was pleased with the speech last week,” Mnuchin said in an interview with CNBC.
Last Tuesday, one day before Powell spoke, Trump told the Washington Post that he was “not even a little bit happy” with his selection of Powell.
On Wednesday, Powell told the Economics Club of New York that interest rates are “just below” the level where they won’t stimulate the economy.
Read: Seemingly dovish, Powell says interest rates are ‘just below’ level where they won’t stimulate economy
Related: Why economists insist Powell wasn’t as dovish as market thinks
Financial markets seized on the comments as dovish, with U.S. stocks DJIA, +0.98% rallying and the dollar DXY, -0.20% falling, as it indicated that interest rates might not go as high as the Fed seemed to suggest only a few weeks ago.
Krishna Guha, head of global policy and central banking strategy at Evercore ISI, said investors were correct to sense the dovish shift in Powell’s comments.
“We think most investors got the basic message right: Powell was signaling that the Fed recognizes that it may not have far to go before it reaches a neutral rate setting and — given everything else going on — it will proceed carefully from here,” Guha said.
Mnuchin said Powell’s comments that they were close to neutral “are important,” and says he was pleased the Fed was going base decisions on the incoming data.
“They are not relying upon super-secret models and stars and things like that, they are going to react to numbers,” he added.
The Treasury Secretary said recent inflation numbers “have been quite attractive.”
“The fact that oil prices have come down is very important in terms of inflation,” Mnuchin said.
Steve Pearlstein, a columnist with the Washington Post, criticized Powell for not pushing back on Trump.
In a column, he said Trump will now be emboldened to take every opportunity to politicize the Fed.
“I seriously doubt Powell actually succumbed to presidential pressure, or meant to announce a change in policy, but that was the way it looked to a lot of sophisticated people,” he said.
Asked about reports that Trump is unhappy with him for backing Powell’s appointment to the Fed leadership, Mnuchin dodged but said he and president don’t see eye-to-eye on everything.
“I will continue to give the president my best advice,” he said.
Mnuchin added he thought Powell was facing a “difficult job” cleaning up a mess left by his predecessors.
Powell “was left with the hard work to try to normalize rates and stabilize the portfolio so that he has the firepower if the economy slows down to juice the economy,” Mnuchin said.
“He was left with a gigantic portfolio that was increased over $4 trillion in the previous administration that he is trying to right-size,” Mnuchin said.
“We had interest rates at zero for way too long to try to help the Obama economy and it didn’t do much,” he said.
Mnuchin confirmed a Bloomberg report that he privately asked bond dealers whether they would rather the Fed tighten policy by shrinking the balance sheet faster rather than by raising interest rates.
Mnuchin said he was simply soliciting views from a Treasury advisory committee that was set up to give the government feedback.
The group was split in its response, according to the Bloomberg report.