Louisiana Senator John Kennedy Talks Impact of Iran Pressure Campaign

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.

**Joe Mathieu** (0:07)
Joining us now live from Capitol Hill is Republican Senator John Kennedy of Louisiana. He's a member of the Senate Banking Committee, as well as the Budget and Judiciary Committee. Senator, welcome to Bloomberg TV and Radio. It's great to have you on Balance of Power, especially on a Fed day of all days. If the Fed didn't hike today, are you concerned that they might have to do so just ahead of the midterms?

**John Kennedy** (0:30)
Well, they might.
I guess I'd make two points. Number one, let's not lose sight of the big picture. I wouldn't trade the American economy right now for any economy in the world. Not China, not Germany, not anybody in Europe, not Canada. Number two, I think the Fed didn't hike because they don't know what to do. Now, they're not gonna come out in front of the American people and say, we don't know what the hell to do. But they're not clairvoyant. They have to wait for the future like everybody else. The Fed under Chairman Powell cut rates because they were worried about the labor market. Labor market's okay, it's not great, but we're not adding a ton of new jobs, but nobody's being laid out, laid off, relatively speaking. But we've got inflation, and it's caused by three things, no particular order. Number one, all this AI spending, they're spending billions of dollars. I hope those guys know what they're doing because they've got to pay the money back.
Number two, to a lesser extent, tariffs.
When imports cost more, that contributes to inflation. But number three, the energy costs. I mean, you don't have to be Einstein's cousin to figure that out. And so, they want to just watch it and wait a little bit more. And that's what I would have done. Just wait and see to get a little bit more data. But let me say this. Look, inflation is pernicious. You cannot let it get out of control. And I know the Fed supposedly has a dual role, inflation, price stability and full employment. But its main role is inflation. And they're going to have to, if we don't get control of it, they're going to have to raise rates. Now, I'm not saying that's going to make me happy, but they can't let this inflation get out of control.

**Kailey Leinz** (2:34)
A lot of folks thought he would hike, the Fed would hike rates today. I can't imagine what the market would have done in that world, Senator. What do you make of the performance today? Could he have communicated things differently? Because this market reaction is visceral. You've got a 30 year at 5.2 percent. I'm kind of scared to think of what's going to happen tomorrow morning.

**John Kennedy** (2:55)
Well, let me say it again. The people at the Fed are not clairvoyant. They have to wait on the future like the rest of us. Number two, I don't want to overstate this, but sometimes the economists at the Fed remind me of those late night psychic hotlines that you see on TV. I mean, they're about as accurate because they just don't know.
But the chairman can't come out today and say, hell, if I know, we know inflation is a problem, but we're not sure if it's going to come down because we're not sure about what's going to happen in Iran. But that's the truth. That's what's going on.

**Joe Mathieu** (3:36)
Well, on the subject of Iran, Senator, as I'm sure you well know, President Trump is threatening to retaliate against Iran after what the US described as a surprise attempted attack on US assets in Jordan. If we're responding to Iranian attacks, as CENTCOM said was the case in the previous 12 days of strikes we're just coming off of, is the US really in control in this theater?

**John Kennedy** (3:59)
Well, I've been very supportive of what President Trump has done in Iran. I think it was something we had to do. That's point one. Point two, there are limits to American air power.
I don't have the intelligence that the president has, so I don't know about the additional strikes. But I think the two most effective things we can do right now to get Iran to behave is, number one, the sanctions on its sale of oil, and number two, that blockade. I think we're just going to have to starve them out. Now, that's going to be painful because energy prices could go even higher.
And nobody wants that. I don't want that. But we can't, our credibility is at stake, and Iran is dangerous, and we have to do something about it. I don't support putting troops on the ground. And I'm not convinced, but again, I don't have the information, that all these extra strikes are doing any good. But I know one thing, that blockade, if you leave it on long enough, Iran's going to have to start shutting down its wells because it's got no place to put its oil. And once Iran shuts down those old wells, they may not be able to get them going again. And if we can stay the course a few more months, I think Iran will be easier, not easy, but easier to deal with. But you also have to remember that you're dealing with the son of Sam or Charles Manson. These people are not just madly insane.