Federal Reserve Bank of Richmond President Thomas Barkin said Tuesday that he expected the unemployment rate to hit double digits, as businesses across the country remained shuttered by the coronavirus pandemic that’s walloped the global economy.

Barkin pointed to the roughly 30 million people working in restaurants, retail, travel, and entertainment that make up about 20% of the workforce — and a jobless rate may reach the mid-to-high teens as those workers are shut out of the workforce involuntarily.

“We’re going to have a tough second and third quarter, that’s for sure,” Barkin told Yahoo Finance on Tuesday afternoon.

The central banker, who is not currently a voting member of the Fed’s policy-setting Open Markets Committee, said he is more focused on the pace of the recovery. The central bank is using its vast monetary policy tools to support the U.S. economy, with trillions of dollars in support for businesses and consumers.

In addition to slashing rates to near-zero and resuming the crisis-era policy of absorbing assets through quantitative easing, the Fed last week unveiled a $2.3 trillion package of funding aimed primarily at loans to Main Street businesses and municipal debt markets.

The package is backed by about half of the $454 billion appropriated to the U.S. Treasury from the CARES Act, which hopes that Fed liquidity will supplement Paycheck Protection Program (PPP) loans to keep businesses afloat during the crisis.

“We're willing to be pretty creative and pretty innovative in terms of bringing money where it's needed, within the constraints of our legislatively granted authorities,” Barkin said.

The Fed’s $2.3 trillion package also offers liquidity to some high-yield debt, as Fed officials worry about a wave of defaults as companies endure a near full stop on revenue. The Fed’s facilities offering to absorb primary and secondary corporate debt will now extend its scope from investment grade (IG) debt to select “fallen angel” debt from issuers that have lost IG status.

Barkin, however, said the Fed is not taking on CCC debt, and is only focused on the “top credits.” He added that the Fed is not “trying to pick winners or losers,” but ensuring that market liquidity is available.

“When you get a stress situation like this you will see companies face liquidity stresses, and I saw a couple folks who filed today,” Barkin said.

Barkin said the banks are not at risk, and unlike the last crisis have been a “pillar of strength.”

Barkin said that the key will be giving the American consumer the confidence to go back to normal activities like traveling and dining out. He urged businesses to be innovative in providing sanitary and socially distanced shopping experiences, for example.

In the meantime, Barkin said his message to businesses and households is that the Fed’s near-zero rates will prove critical when the recovery comes.

“We took rates to zero, and hopefully that’ll help stimulate some amount of investment, both on the consumer and business side when we get through this health crisis,” Barkin said.

Brian Cheung is a reporter covering the Fed, economics, and banking for Yahoo Finance. You can follow him on Twitter @bcheungz.

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