Fed Chair Jerome Powell stressed Wednesday that more aid from Congress and the central bank is likely to be needed, especially since a substantial number of Americans may never get their jobs back.

“Unemployment remains historically high,” Powell said during a news conference Wednesday. “My assumption is there will be a significant chunk … well into the millions of people, who don’t get to go back to their old job … and there may not be a job in that industry for them for some time.”

To revive the economy from the deepest recession since the Great Depression, the Fed pledged to keep interest rates at zero, most likely through 2022, and to continue its extensive bond-buying programs at the current pace for the foreseeable future. The Fed’s historic efforts, which could swell its balance sheet to $10 trillion by year’s end, are also fueling deeper inequality in the United States, many economists say.

Low interest rates make it cheap to get a loan for a car, mortgage or business operation, but people generally need to have savings and a stable job to get access to credit. The cheap rates have also fueled incredible stock market gains. The Fed has limited tools to use in emergency situations such as this and they tend to buoy Wall Street far more than Main Street.

“The Fed’s response has deepened wealth inequality. They’ve produced an incredible recovery in asset prices and most of these assets are owned by the rich and the white segment of the population,” said Mohamed El-Erian, chief economic adviser at Allianz. “All they can say is the alternative would have been worse.”

Lower interest rates have triggered one of the swiftest rebounds in stock market history and made it cheaper for Americans to borrow money to buy homes or take out a business loan.

Mortgage rates fell to an all-time low at the end of May, causing a surge in home-buying, even during the pandemic. But Americans need to have substantial savings to be able to invest in the market or purchase a home.

The Fed’s own data shows only about half of Americans have any money invested in the stock market, and nearly 40 percent of households do not have enough cash on hand or in a bank account to cover an emergency $400 expense, leaving them especially vulnerable if they lose their job or have their hours cut.

Numerous lawmakers from both parties have also expressed disappointment that the Fed has still not been able to get its so-called Main Street Lending program aimed at small and midsized companies up and running after two months.

Powell defended the Fed’s actions, arguing that the central bank’s swift intervention helped prevent the health and economic crisis from turning into a financial panic that would have cost more jobs and caused far more bankruptcies. But he said the Fed’s tools are blunt and Congress would likely have to play the bigger role in helping specific people and companies hardest hit by the crisis.

“Many borrowers will benefit from these [Fed] programs, as will the overall economy,” Powell said, but he noted there will limits to what the central bank can do. “Direct fiscal support may be needed. Elected officials have the power to tax and spend and to make decisions about where we, as a society, should direct our collective resources.”

Powell stopped short of recommending any specific actions by Congress. Economists across the political spectrum have called for federal aid to cash-strapped state and local governments that have already cut over half a million jobs as they try to balance their budgets as they deal with the coronavirus and widespread protests.

But many economists are also concerned that enhanced aid for the unemployed, including an extra $600 a week in unemployment benefits, expires at the end of July, when jobs are still likely to be scarce. How to help these people left out of the rebound remains contentious in Congress. The same is true of what to do for restaurants, movie theaters and other businesses that still can’t fully reopen.

Low-wage black and Hispanic women have been especially hard hit by job loss during the pandemic. This population had some of the lowest savings heading into the crisis.

“The low end of the income spectrum really needs a Marshall Plan from the government,” said Sung Won Sohn, president of SS Economics. “The U.S. government done good job so far of preventing the economy form going into a depression, but going forward, we need to have a balance between economic growth and income distribution.”

In an ironic twist, the Fed’s actions might actually make it harder to rally support in Congress for more aid, especially among Republicans who have pointed to the stock market rebound as a sign optimism is back.

Shortly before Powell spoke, Treasury Secretary Steven Mnuchin was testifying on Capitol Hill where Republican lawmakers grilled him about whether more stimulus is necessary given that the economy is reopening, stock markets are back near record levels and there are signs of a pickup in flights, hotel stays, restaurant reservations and other activity.

“There is still significant damage in parts of the economy,” Mnuchin said, echoing Powell. “We’re going to consider using all of our fiscal tools, working with Congress to make sure that we restore this economy back to where it was and where it should be, and to make sure that the many Americans that still don’t have jobs get back their jobs.”

But Sen. Mitt Romney, R-Utah, captured the sentiment of many in the GOP caucus when he told Mnuchin, “I’m puzzled by the statement that you make that we’re going to need a stimulus to get the economy going again.”

Powell and Mnuchin have worked closely together since mid-March as the scope of the economic crisis became clear. Together, they are responsible for dispersing about $500 billion in aid to U.S. companies, of which only a fraction has been spent so far. A significant amount of remaining money is intended for the Main Street Lending program, which Powell said is in the “final run up” to launching soon.

The Fed’s forecasts released Wednesday were noticeably rosier than many others, including from the Congressional Budget Office, which predicts unemployment will remain above 11 percent at the end of this year and will only fall to 9.3 percent by the end of 2021.

The central bank is anticipating a solid turnaround to take hold later this year and build in 2021. Fed leaders each make their own forecasts for the economy’s path, but the median estimate is for the economy to shrink this year by 6.5 percent and then grow by 5 percent in 2021.

But a partial rebound does not mean the economy will be back to where it was anytime soon.

“By the end of 2021, the loss of income exceeds that of any previous recession over the last 100 years outside wartime, with dire and long-lasting consequences for people, firms and governments,” warned Laurence Boone, chief economist at the Organization for Economic Co-operation and Development in a report issued Wednesday.

Powell and Mnuchin tried to walk a fine line of applauding the encouraging signs that some consumer and business spending is picking up again, but reminding the public and other policymakers that the United States remains far from where it was in February, when unemployment was at a half-century low and optimism among consumers was at the highest since the late 1990s.

“It is clear that the Fed does not anticipate a V-shaped economic recovery and is positioned to move forcefully to support the economy if there is an error in trade or fiscal policy,” said Joseph Brusuelas, chief economist at RSM, in a note to clients.

Stocks initially rallied on the Fed news that interest rates would remain at historic lows for years, but the gains for the broader market evaporated as Powell said he was in “risk management” mode, presenting a cautious view of how many hurdles remain for a widespread recovery.

The tech-heavy Nasdaq index hit a record this week, and the S&P 500 erased all its losses for the year. But some are concerned the Fed is fueling a stock market bubble, yet another challenge.

“Markets are working just fine now. So why is the Fed still buying $20 billion of Treasurys a week?” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.

Powell has made it clear he prefers to err on the side of caution to ensure the economy improves instead of sliding backward in the coming months.

“We’re not thinking about raising rates. We’re not even thinking about thinking about raising rates,” Powell said Wednesday.

The Transport Ministry, however, has assured the bid-winning consortium led by Charoen Pokphand (CP) Group that the necessary land will be handed over by January or February next year as planned.

Chaiwat Thongkamkoon, Transport Ministry’s permanent secretary, said overall the high-speed rail project has been proceeding as planned after the Bt224-billion contract was signed in October last year.

The ministry has been urging the State Railway of Thailand (SRT), the Department of Highways and the Department of Rural Roads to speed up the removal of public utility structures to make way for the railway, Chaiwat said after chairing a meeting to discuss the process of land handover.

According to the latest land survey, the SRT needs to expropriate 885 rai (141.6 hectares) instead of the previously estimated 857 rai. Under this new estimation, 360 buildings will have to be removed instead of 334 initially targeted, though the clearing of trees remains at 517 parcels of land.

Apart from having to deal with illegal squatters, SRT also needs to tear down 197 of the 782 buildings on its land between Don Mueang and Suvarnabhumi airports. Between Suvarnabhumi and U-Tapao airports, there are 570 buildings or homes located on SRT land and 301 need to be torn down.

He added that most of these buildings belong to members of nearby communities, so SRT needs to find land for their relocation.

The contract for the 220km high-speed rail requires that SRT handover the land for the Lat Krabang to U-Tapao section within one year and three months after the signing of the contract and land for the Don Mueang to Phya Thai section within two years and three months.

SRT will also hand CP the right to run the Airport Rail Link from October 2021. The future of staff at the Airport Rail Link will depend on the agreement SRT and CP make, Chaiwat said.

Meanwhile, an informed source at the SRT conceded that the clearance of electricity poles and tap water facilities to make way for the construction sites is behind the schedule by a month or two, largely due to the impact of Covid-19. The Transport Ministry has earmarked Bt335 million for the clearing of utilities.

Separately, SRT has filed lawsuits against illegal occupants of its land, while CP has started surveying the construction sites, officials said.

It made the grim assessment in its quarterly outlook, where it forecast a global slump of 6% this year, more than the World Bank earlier this week. That’s based on a scenario of the virus continuing to recede. A second wave, which the OECD said is an equally likely scenario, could mean a 7.6% contraction.

As authorities relax restrictions on movement and activity, some numbers suggest economies are through the worst of the slump. But the OECD said withdrawing support for workers and businesses risks prolonging the economic and social damage from the pandemic. In the U.S., some Republicans are already questioning the need for more stimulus after a surprise jump in payrolls in May.

In the OECD’s view, huge risks remain. With some industries facing long-term damage — airlines have already announced thousands of job cuts — it warned that an increase in bankruptcies and sustained period of unemployment is likely.

“It’s really important we don’t repeat the mistake of the financial crisis and that we do support this transition until growth and employment growth regains momentum,” Chief Economist Laurence Boone said.

Given the already clear impact of restrictions and lockdowns, the OECD’s gloomy outlook is unsurprising. But it also highlighted the social fallout, and the deepening fault lines created by the virus. More trade constraints are springing up, and lockdowns have heightened inequalities between workers, with the youngest and least qualified on the front line.

“We’ve never seen such uncertainty,” Boone said. “That’s the most difficult thing in this crisis — things have to evolve week by week because the situation may change so dramatically.”

Governments must pay particular attention to the most vulnerable, according to the report. The young and low-paid are make up a larger share of the workforce in the sectors most exposed to job losses and health risks, while highly qualified workers have more often been able to work at home.

In the outlook, the OECD sees the U.S. shrinking more than 7% in 2020 in the “single-hit scenario” while the euro area suffers a 9% contraction. Italy, France and the U.K. will all shrink more than 11%.

It’s an unprecedented challenge for governments, who’ve already spent billions to keep businesses afloat and workers in jobs until their economies reopen. The OECD said support must now be adapted to help companies in ailing industries restructure, and workers retrain. But such transitions take time, and many more businesses may fail in the meantime, which means greater job losses.

The OECD said policy makers will have to walk a “tightrope” between continuing to provide exceptional — and costly — safety nets and not being trapped into upholding activity for a long period.

“Policies need to mitigate inequalities being worsened by the crisis,” OECD Secretary General Angel Gurria said. “We know many of the worst off and most vulnerable are being hit hardest by the pandemic.”

During the morning session, a stock analyst at Krungsri Securities said he expected the index to fall between 1,395 and 1,400, before rebounding, owing to the lack of new positive sentiment to stimulate investment, as investors hold off on trading to keep an eye out for developments in the US Federal Open Market Committee (FOMC) meeting.

“Investors expect FOMC to maintain the interest rate at 0-0.25 per cent and unlimited quantitative easing,” the analyst said. “We also have to keep an eye on the US Federal Reserve’s announcement on the signs of a US economic recovery after the lockdown relaxation.”

The analyst added that the index will be under pressure from tight valuation as the index’s price-to-earnings ratio is more than 20 times.

The top 10 stocks with the highest trade values today were MINT, CPF, SCB, BAM, KBANK, PTT, BBL, STA, PTTEP and AOT.

As of 4.30pm, crude oil had dropped by $1.03 or 2.65 per cent to $37.91 per barrel, while gold rose by $3.90 or 0.23 per cent to $1,725.80 per ounce.

Global indices, meanwhile, had a mixed day:

Japan’s Nikkei Index closed at 23,124.95, up 33.92 points, or 0.15 per cent.

China’s Shanghai SE Composite Index closed at 2,943.75, down 12.36 points, or 0.42 per cent, while Shenzhen SE Component Index closed at 11,335.86, up 51.62 points, or 0.46 per cent.

Hong Kong’s Hang Seng Index closed at 25,049.73, down 7.49 points, or 0.030 per cent.

South Korea’s KOSPI Index closed at 2,195.69, up 6.77 points, or 0.31 per cent.

Taiwan’s TAIEX Index closed at 11,720.16, up 83.05 points, or 0.71 per cent.

“We are providing a platform for ministers and well-known experts to discuss the immediate challenge posed by Covid-19 and identify areas worthy of additional analysis for the future,” Asakawa said during an online event on Tuesday (June 9).

“The second and third waves of the disease are possible — indeed likely — and further economic decline would be costly. Countries face a whole host of cross-cutting issues that affect people and businesses. They have already learned useful lessons and can benefit from sharing these with each other.”

The virtual event drew senior officials from the region’s three largest economies, namely Indonesian Finance Minister Sri Mulyani Indrawati and the Philippines’ Finance Secretary Carlos G Dominguez, both of whom are ADB governors, as well as the Philippines’ central bank governor and ADB alternate governor Benjamin Diokno as well as the country’s acting secretary for Socioeconomic planning Karl Chua. Also present in the meeting was Bank of Thailand governor Veerathai Santiprabhob.

The high-level officials exchanged views with eight international experts, namely:

Jane Halton, chair of the Coalition for Epidemics Preparedness Innovation and former secretary of the Australian departments of health and finance;

Rema Hanna, Harvard Kennedy School;

Karen Tay Koh, former Singapore Ministry of Finance official and former deputy CEO of SingHealth;

Ramayya Krishnan, Carnegie Mellon University;

Anup Malani, University of Chicago;

Raghuram Rajan, University of Chicago, former governor of the Reserve Bank of India and chief economist of the International Monetary Fund;

Andrew Sheng, Asia Global Institute;

Nicholas Stern, London School of Economics; former head of the United Kingdom’s Government Economic Service and former chief economist of the World Bank.

The panel, moderated by ADB vice-president Ahmed M Saeed, discussed lessons learned as countries took immediate measures to address the pandemic’s devastating impact on health, social, economic, and finance, as well as their medium- to long-term priorities. They also covered topics such as the need for structural reform, innovation in domestic resource mobilisation, and how to make recovery sustainable amid global headwinds.

ADB had on April 13 announced a US$20 billion package to support developing member countries with their Covid-19 response. ADB has since approved $7.2 billion in rapid response loans and technical assistance, including nine interventions under the Covid-19 pandemic response option (CPRO) totalling $5.52 billion for Bangladesh, Bhutan, Georgia, India, Indonesia, the Kyrgyz Republic, Mongolia, Nepal and the Philippines.

Indonesia has received $1.5 billion for countercyclical response and $3 million in grants to shape the government’s immediate health response. The Philippines has received $1.7 billion for countercyclical support and social protection, and $3 million in grants to set up a Covid-19 testing laboratory. ADB staff is working on helping other Southeast Asian countries including Thailand, as well as other countries in the Asia and Pacific region.

The high-level dialogue is supported by a $5 million technical assistance grant, which ADB approved on April 24. The grant will help countries receiving CPRO funding monitor their Covid-19 response and guide them in preparing recovery strategies and action plans.

Meanwhile, it projects a 5-10 per cent drop in exports this year, and inflation rate to move between 0 and minus-1.5 per cent.

Predee Daochai, chairman of the Thai Bankers’ Association, said that almost all economic indicators fell in April, including exports, manufacturing, consumption, and investment.

“Only government spending expanded,” he said.

“The economic decline was mainly due to disruption caused by lockdown measures issued by countries around the world to contain the spread of Covid-19.”

He noted that the government had allowed businesses to reopen and issued relief measures to mitigate the impact of Covid-19.

“However, economic recovery will take time due to changes in consumers’ behaviour, the economic recession, and the US-China trade war,” he added. “Therefore, the unemployment situation in the country is still worrisome.”

He advised the government to issue a recovery plan as soon as possible, focusing on projects that generate income for the grassroots economy and help local businesses to create jobs for people nationwide.

As of 9.23am, buying price of a gold bar was Bt25,350 per baht weight and selling price Bt25,450, while gold ornaments were priced at Bt24,892.72 and Bt25,950, respectively.

At close on Tuesday (June 9), buying price of a gold bar was Bt25,250 per baht weight and selling price Bt25,350, while gold ornaments were priced at Bt24,801.76 and Bt25,850, respectively.

The Gold Spot Index price on Wednesday morning moved to around US$1,718 (Bt53,642) per ounce after the price rose by $16.8 to $1,721.9 per ounce at close on Tuesday.

Investors were buying safe-haven assets after stock indices worldwide dropped due to mass sell-offs, while the dollar weakened after the US reported decline in economic data.

The price in the Hong Kong gold market rose by HK$115 to $15,860 (Bt63,895) per tael.

A stock analyst at Krungsri Securities expected the index to fall between 1,395 and 1,400, before rebounding, due to lack of new positive sentiment to stimulate investment, while investors would hold off on trading to follow developments in the US Federal Open Market Committee (FOMC) meeting.

“Investors expect the FOMC to maintain the interest rate at 0-0.25 per cent and unlimited quantitative easing,” the analyst said.

“Meanwhile, we have to also keep an eye on the US Federal Reserve’s announcement on signs of a US economic recovery after the lockdown relaxation.”

The analyst added that the index would be under pressure from tight valuation as the index’s price-to-earnings ratio is more than 20 times.

He recommended investors buy:

▪ Stocks that would be added to the SET50 and SET100 calculation, such as BPP, TTW, ACE, DOHOME, RBF, SIRI, SISB, TVO and WHAUP.

▪ Stocks whose second-quarter performance will improve, such as CKP, TASCO, STA and RS.

▪ Defensive stocks, such as INTUCH, TTW and DIF.

The SET Index on Tuesday dropped sharply by 30.29 points or 2.11 per cent, closing at 1,408.37 as investors sold stocks due to tight valuation. The total transaction volume was Bt115.559 billion.

Foreign investors made net buy of Bt486 million in stocks, but made net sales of Bt4.975 billion in the bond market. There were 5,301 Net Long TFEX SET50 contracts.