In an interview on "This Week,” Mulvaney told ABC News Chief White House Correspondent Jonathan Karl that he spoke with Treasury Secretary Steven Mnuchin on Saturday night, and that Mnuchin said Trump won't seek to dismiss Powell.
"I did speak with the treasury secretary last night about a bunch of things, including the lapse in appropriations and the shutdown, and he did mention that to me," Mulvaney said.
Several media outlets reported last week that the president was contemplating firing Powell. The New York Times reported the president told advisers Powell will "turn me into Hoover," referring to President Herbert Hoover, who presided over the beginning of Great Depression.
In a tweet on Saturday night, Mnuchin quoted the president as saying, "I totally disagree with Fed policy. I think the increasing of interest rates and the shrinking of the Fed portfolio is an absolute terrible thing to do at this time, especially in light of my major trade negotiations which are ongoing, but I never suggested firing Chairman Jay Powell, nor do I believe I have the right to do so."
Mulvaney echoed the acknowledgment of tension between the president and the Federal Reserve, but said it isn't unusual.
"So the tension between the president and an independent Fed is traditional as part of our system," Mulvaney said. He continued that "it shouldn't be surprising to anybody that the president is not happy that the Fed is raising rates, and, we think, driving down the value of the stock markets."
The Federal Reserve announced on Wednesday that it will raise interest rates for the ninth time since December 2015 to a range of 2.25 percent to 2.5 percent.
In a press conference after the announcement, Powell said, “We saw a rising trajectory for growth in 2018. Today we see a moderating trajectory." The Fed also signaled that it will only raise rates twice in 2019.
While the stock market saw its worst week since the 2008 financial crisis and is currently on track for the worst December since the Great Depression, Michael Feroli, the chief U.S. economist for J.P. Morgan, told ABC News the move to increase rates is "appropriate."
Mulvaney agreed that the health of the economy is good, telling Karl that "the fundamentals" of the economy are still strong, and that "nobody thinks we're going into a Great Depression."