Watch Live: Minneapolis Fed President Neel Kashkari Speaks

Minneapolis Federal Reserve President Neel Kashkari on Tuesday said he still sees "a lot of slack" in the US labour market, with some six million to eight million Americans out of work who would have been employed had the pandemic not hit.

''We are a few years away from raising the Federal funds rate'' said Kashkari at the Pacific Northwest Economic Regional Annual Summit in Big Sky, Montana. 

"There still is slack on the sidelines," he argued. 

He said that recent high inflation readings are likely to be short-lived, and should subside as workers return to the labour force; still, he added, the Delta variant could slow the recovery.

On taper, he said ''it's a question of when not if,'' and, ''timing of taper will depend on progress in labour market.''

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Key comments

Sees inflation transitory. 

Even with a strong July jobs report, still 6-8 mln Americans not working who would have been had pandemic not happened.

Still see a lot of slack in the labour market.

I believe these will be short-lived high inflation readings.

monitoring data closely to see if high inflation readings will be temporary or not.

The base case scenario is people do want to work, will return to the labour market.

Govt borrowing at low interest rates to fund long-term investments doesn't give me concern.

Too much debt for the economy would lead to inflation, but that should show up in rate that govt borrows at, and don't see that now.

Fed would raise rates to fight inflation if needed.

Delta variant is a risk.

Have delayed return to work for Minneapolis fed staff.

Delta effects could lead to a more sluggish recovery.

On taper, it's a question of when, not if.

Timing of taper will depend on progress in labor market.

End of this year, the beginning of next year, are reasonable possibilities for the start of the taper.

Best guess is fed is still a few years away from raising interest rates.

Market implications

• US dollar bid for its safe-haven status and on central bank divergence

As per the article above, Kashkari is bucking the trend of other hawkish Fed members but is unlikely to shift the expectation in the market of a move to tapering from the Fed later this year.