Mnuchin defends ‘phenomenal’ Powell after Trump criticism

Treasury Secretary Steven Mnuchin defended Federal Reserve Chairman Jerome Powell in a Tuesday interview a week after President Trump blasted the central bank and its chief.

Mnuchin told CNBC on Tuesday that Powell has been a “phenomenal leader” of the Fed that “understands the issue of growth.” He added that he meets with Powell on a weekly basis but wouldn’t comment on the Fed’s plans to raise interest rates out of respect for its independence.

“We talk about a lot of economic issues. It would be inappropriate for me to comment on interest rates in that position,” Mnuchin told CNBC.

{mosads}“He’s carefully monitoring the growth numbers and the inflation numbers and we’ll see.”

Mnuchin’s defense of Powell is a stark contrast to Trump’s intensifying criticism of the Fed chairman. The president told Reuters last week that he was “not thrilled” with Powell’s support for gradual interest rate hikes, and reportedly complained about the Fed chairman at a Republican Party fundraiser in New York three days prior.

The Fed has raised interest rates seven times since 2015 in an effort to phase out stimulatory conditions created to combat the 2008 recession.

Most Republicans and right-leaning economists favor hiking interest rates to prevent the economy from overheating and causing rampant inflation. Unemployment has sunk below levels the Fed considers to be the threshold for a stable economy, while inflation has crept closer to the bank’s ideal level.

But Trump has called on the Fed to maintain low interest rates to bolster further job growth ahead of the midterm elections. The president and National Economic Council Director Larry Kudlow have also downplayed the risks of holding off on rate hikes, questioning why the Fed would want to slow down a red-hot economy.

Trump has also accused the Fed of hindering his efforts to strike more beneficial trade deals for the U.S. Interest rate hikes increase the value of the U.S. dollar, raising the costs of American exports and widening trade deficits, which are a constant source of ire for Trump.

Trump told Reuters the Fed’s rate hikes hurt the U.S. as the European Union and China drive down the value of their currency. The president often accuses the EU and China of weakening their currency, but the Treasury Department has not labeled either as a currency manipulator.

Mnuchin also praised Beijing on Tuesday for taking measures to bolster the value of its currency, which had faltered over concerns about China’s slowing economy and broader investor anxiety about emerging markets.

“Their currency is more of a controlled currency than other markets that are free access,” Mnuchin told CNBC. “But if they go in and support their currency, that is not currency manipulation.”